As we were going to press, a winter storm is expected to dump up to 18 inches of snow on New York City, bringing bone-chilling temperatures and a travel nightmare across the tri-state region.
Last week began with heightened tensions over Greenland, as President Trump revived threats of tariffs on European allies amid his push for expanded U.S. influence in the Arctic. By the end of the week, diplomacy at the World Economic Forum in Davos had eased the immediate pressure. Our favorite Space Race 3.0 ideas in order are: 1. Planet Labs PBC 2. Rocket Lab Corporation 3. L3Harris Technologies 4. Intuitive Machines 5. Northrop Grumman Corporation SpaceX is laying groundwork for a 2026 IPO, having engaged Bank of America, Goldman Sachs, JPMorgan Chase, and Morgan Stanley to explore a public offering that could raise $25-30 billion or more- potentially making it the largest IPO ever. In other news, Blue Origin is launching TeraWave, a 5,400-satellite internet network aimed at enterprise, government, and data center users, offering fast, reliable, and highly redundant connections rather than consumer broadband to compete with SpaceX's Starlink. Rocket Lab Corporation ( RKLB $88.90) provided an update on the development of its Neutron rocket following a qualification test issues involving the vehicle's first stage. During overnight hydrostatic pressure testing of the Stage 1 tank, the structure ruptured while being pushed beyond expected operating limits - not uncommon during qualification campaigns which are designed to intentionally stress systems and structures to validate safety margins and ensure launch readiness. Based on our proprietary DCF model, Rocket Lab has an intrinsic value of $160, with the main risks execution and delays in Neutron launch. Meanwhile, back on Earth. Elon Musk and Ryanair CEO Michael O'Leary have been trading insults after Ryanair rejected installing SpaceX's Starlink in-flight Wi-Fi on its planes, triggering takeover jokes and promotional back-and-forth on social media. Ryanair has embraced the publicity, launching a tongue-in-cheek "idiot" seat sale and reporting a boost in bookings. We had the pleasure of meeting with Joe Adams, CEO of FTAI Aviation( FTAI $292.10) on Friday, January 23, 2026 for lunch to catch up on recent developments at the company. We focused on FTAI's new Power business and its recently announced agreement with CFM International, the 50:50 joint venture between GE Aerospace and Safran International. As a result of these developments, we are increasing our long-term price target to $605 from $550 bases on our sum-of-the-parts analysis. Our price target now assumes 10x 2028 Aviation Leasing EBITDA and 36.5x Aerospace Products EBITDA, resulting in 30x core EBITDA. For context, HEICO, the aircraft parts maker, trades at 30x 2028 EBITDA despite lower margins and fewer organic growth opportunities than FTAI. In the FTAI Power business, FTAI converts a CFM56 engine into an industrial gas turbine by removing the fan of the engine, connecting the engine to a generator, adding a gearbox, and changing the fuel source. These converted turbines serve as efficient power sources for data centers, which are facing political pressure due to higher electricity costs for local citizens. FTAI expects revenue of $25million per converted turbine, with EBITDA margins equal to or better than its current Aerospace Products segment at 35%. FTAI also announced a new agreement with CFM International that secures access to OEM replacement parts, approved repair solutions, and thrust performance upgrades for CFM56 engines. This supports FTAI's core business of engine maintenance and aims to improve availability, predictability, and cost efficiency of engine support services for global operators. In addition, United Airlines CEO Scott Kirby mentioned on United's earnings call that he expects current engine availability constraints to continue well into the next decade, confirming an engine shortage that structurally benefits FTAI. FTAI Aviation is our favorite idea in Aviation Services with the main risk execution. Our favorite global airline ideas, in order, are: 1. Delta Air Lines 2. United Airlines Holdings 3. Southwest Airlines 4. Alaska Air Group 5. JetBlue Airways 6. Volaris 7. Ryanair Holdings plc 8. American Airlines Group 9. Allegiant Travel Company Joby Aviation is our favorite eVTOL idea and Archer Aviation is a longer-term favorite. Two airlines reported fourth quarter financial results last week - United Airlines Holdings(UAL $107.74) and Alaska Air Group( ALK $50.87). United Airlines reported adjusted diluted EPS of $10.62 for 2025 - the only airline to produce higher earnings than last year and provided guidance of $12 to $14 for 2026. We are increasing our price target to $220 from $200, assuming 11x 2028 EPS of $20 versus 10x previously. The company could provide additional disclosures regarding its loyalty program, opening the door to a sum-of-the-parts valuation with higher multiples assigned to the loyalty program. The main risks are recession and geopolitical tensions. Alaska Air Group reported adjusted EPS of $2.44 for 2025 and provided guidance of $3.50 to $6.50 for 2026 - a wide range due to uncertainty around macroeconomic factors and jet fuel prices. We are lowering our price target to $100 from $120, assuming 10x our estimated 2028 EPS of $10 versus 12x previously. The main risks are merger integration, higher fuel prices, and recession. Also, in the Heard in the Hangar, are our takeaways on RKLB, PL, LUNR, LHX, NOC, FTAI, UAL, ALK, FLYYQ, LUV, JBLU, RYAAY, AAL, ALGT, JOBY, and ACHR.
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