FlyExclusive gets 'buy' rating from Wall Street analyst following IPO

BTIG analyst Marvin Wong has initiated coverage of FlyExclusive with a $9 target price.

By Doug Gollan, January 24, 2024

FlyExclusive has earned a buy rating and a target price of $9 for its stock from BTIG in its opening coverage of the newly public aviation company.

For the fifth-largest private jet flight provider in North America, that’s above its closing price today, which stands at $6.65.

Price has ranged between $3.71 and $14.55 over the past 52 weeks.

“We believe FlyExclusive’s diversification into fractional ownership and maintenance, repair, and overhaul is underappreciated by investors,” BTIG’s Marvin Fong wrote in his analysis.

He continued, “Fractional has superior economics, lower capital intensity, and a better growth profile compared to the charter segment,” noting, “Meanwhile, MRO adds a unique revenue stream that can subsidize FLYX’s in-house maintenance program or even turn certain maintenance functions into profit centers.”

The analyst concluded, “We view FLYX’s vertical integration and scale as durable competitive advantages. As FLYX executes on its strategy to grow fractional and MRO to a more meaningful percentage of revenue, we believe shares will re-rate.”

Against competitors, Fong adds, “[W]hile we would argue FLYX deserves to trade at a premium to peers, even applying the same multiple of sales that FLYX’s most direct comparable trades at results in attractive upside potential for the stock.”

Ups and Downs

On the upside, FlyExclusive stock could reach $12, Fong says.

Drivers would be if the “industry makes a strong recovery in 2024, resulting in hourly rates increasing compared to our base assumption for a modest decline” and “fractional demand is strong, resulting in better-than-expected margins on share sales.”

However, there is a potential downside.

Fong cites “an economic downturn that depresses demand for private aviation and drives down industry pricing” and “Tightening in financial conditions that could prevent FLYX from rolling over debt” as downside risks that could push its stock as low as $2 per share.

“By leveraging its successful Jet Club program, FlyExclusive has successfully evolved from a wholesale operator into a well-known, consumer-facing brand in private aviation,” he notes.

In the report, BTIG notes it has received compensation for investment banking services from FlyExclusive in the past 12 months.

It also served as financial and capital markets advisor to SPAC merger partner EG Acquisition Corporation.

The Kinston, North Carolina-based operator joined Volato, Surf Air, and Jet.AI in going public last year.

Wheels Up and Blade both IPOd in 2021.

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