Atlas Air: Time To Sell (NASDAQ:AAWW)

In early August, I discussed a potential acquisition of Atlas Air (NASDAQ:AAWW) by Apollo Global Management. Since then a takeover by Apollo Global Management was indeed announced offering $102.50 per share, and share prices have risen almost 19% since I discussed the possibility of acquisition. While there’s still some upside left, I do believe that this is a time for investors to start considering selling their shares and in this report, I explain why.

Results Not Meaningful

At this point, results are not really meaningful. With a $102.50 offer per share in the pocket Atlas Air reported EPS of $2.69 missing the consensus by $1.57 and revenue of $1.12 billion missed the consensus by $70 million. I haven’t looked much into Atlas Air after the acquisition news, but the best moment to sell would have been prior to earnings when shares were trading around the $101.15 level leaving upside limited to approximately 1.3%.

Take The Profit And Invest Elsewhere

The transaction with Apollo Global Management is set to close by the end of the year or in Q1 2023, so basically it will be completed within one to four months and I don’t expect any delays for the transaction to be completed. However, one could wonder whether it’s really worth remaining invested in Atlas Air. At the time of writing, the stock is worth $100.80 providing 1.7% upside. If 1.7% upside is enough for you to be compensated for your waiting time that could be up to four months then you might want to remain invested.

However, Atlas Air does not pay a dividend and so it might be worth selling your shares now and look elsewhere. Deutsche Bank put a price target on UPS today with a $220 price target providing 19% although the consensus price target of $190.52 provides only little over 3% upside. Deutsche Bank is also bullish on FedEx (FDX) for which a buy rating is maintained and the price target has been increased from $190 to $217 providing 14% upside while Wall Street analysts are expecting around 10% upside. Just from today’s movements in stock prices for UPS and FedEx it would already have been worth to sell Atlas Air shares and invest in other logistics solution providers such as UPS and FedEx.

I can understand that investors right now would not be extremely excited about investing in logistics solutions due to concerns on continued demand strength, but that does not discount the fact that using volatility in the markets one could sell Atlas Airways shares to deploy the funds elsewhere.

Conclusion: Take The Money And Re-invest

This is a relatively brief report, partially because quarterly results are not that interesting for Atlas Air at this moment. The main takeaway is that I believe that while there is still some upside to be unlocked in Atlas Air share prices, one could also consider selling shares and invest the funds elsewhere. Depending on the trading day, the upside that Atlas Air still has can easily be zeroed by buying new names on swings that could make waiting for Atlas Air to unlock the remaining upside not worthwhile.

If you’re extremely risk adverse, by all means remain invested to cash the additional $1.70 in upside but if your time is worth more which is often the case I think this is also a nice time to make your cash useful elsewhere.

If you want full access to all our reports, data and investing ideas, join The Aerospace Forum for the #1 aerospace, defense and airline investment research service on Seeking Alpha, with access to evoX Data Analytics, our in-house developed data analytics platform.