DAVY VIEW

AerCap offers a compelling mix of growth, value and optionality. Its growth dynamic is underlined by $17bn of fleet investment through 2020, driving highly visible core earnings growth and mid-teen gains in book value per share (BVPS) through 2020. The ‘value’ argument is supported by it trading at a 19% discount to end-2018 diluted BVPS. Such a multiple implies concerns around book values but AerCap continues to achieve gains on sale. Excess capital of $1.4-1.8bn by 2020, which will be deployed for shareholder gains, drives optionality. We reiterate our ‘Outperform’ rating and set a 12-month price target of $61.5 (based on 1.0x 2018 diluted BVPS and 10x diluted 2018 EPS), although we note that 2020 BVPS rises to $76.5.