Our $127 target price for AerCap shares is obtained by applying a ca. 9x multiple to adjusted 2026E EPS. This multiple reflects an 8% premium to the stock's pre-pandemic historical average. This level looks reasonable to us in light of the carrier's solid operational momentum, and the company's strong, supply chain-driven demand momentum.

Key risks that could prevent AerCap shares from achieving our target include: (1) softer global economic conditions, resulting in higher default rates from lessees; (2) the residual values on its owned aircraft fall sharply, which could impact lease rates; and (3) higher global interest rates, which could potentially impact the company's servicing of floating rate debt, against lease rates that remain fixed.