Tuesday, 8 April 2008

Analyst Update Targets AMA Shares at $3.00

Basic Shares: 82.2 million
Fully Diluted: 90 million

In a recent update, Research Capital Analyst Jacque Kavafian concluded AeroMechanical shares are a bargain at the current price and he stuck with his earlier prediction that its shares could hit $3 later this year.
In his April 7th update, Kavafian wrote that despite setbacks such as 1) Aloha Airlines ending its passenger operations due to a Chapter 11 filing and 2) Chinese regulatory authorities taking much longer than previously expected to approve AeroMechanical’s (AMA) technology in that country, he is still optimistic about the company’s prospects.
On China, Kavafian wrote that installations “should begin in late July or August 2008,” and that all regulatory approvals are expected by June.
Since Aloha Airlines was a founding customer, and received a heavy discount compared to all other customers that followed, Kavafian wrote that, “we do not expect AeroMechanical to be materially impacted from this event."
He added that Aloha only represented about five per cent of AMA’s projected 2008 revenues and that there could be a silver lining here given the opportunity this gives AMA to follow Aloha’s fleet as new airlines swoop in to purchase mothballed Aloha aircraft equipped with AMA’s technology.
At last reporting, AMA said it had 699 aircraft through 29 different airlines contracted and waiting to install its technology.
“We remain a BUY on the stock and believe that the current share price level (in the mid $0.70 range) presents a good buying opportunity,” Kavafian wrote.