On Friday, CFRA made adjustments to the financial outlook for Textron (NYSE:TXT), a global aerospace and defense company. The firm's analyst reduced the 12-month price target on Textron to $99 from $112.
This revision comes despite maintaining a Buy rating on the stock. The new stock target is based on a 14x multiple of the projected 2025 earnings per share (EPS), which aligns with Textron's historical forward average.
The analyst cited several reasons for the price target adjustment. Textron's first-quarter earnings per share (EPS) of $1.20, although higher than the previous year's $1.05, fell short of the consensus estimate by $0.03.
Revenue growth was modest at 3.7% year-over-year, with the Bell segment showing a notable increase of 17%. However, this was partially negated by a 4% decline in the Industrials segment.
In response to the challenges faced, particularly in the Industrials division, Textron has increased its planned restructuring costs. The estimated pre-tax restructuring expenses are now set between $165 million and $170 million, an increase from the previously projected range of $115 million to $135 million.
Despite the setbacks, the Aviation segment displayed strength, with its backlog growing in the first quarter to an updated $7.3 billion. Moreover, the Bell segment's backlog has reached $4.5 billion. The firm's analyst believes that the positive outlook for Textron's Aviation and Bell segments remains robust.
Shares of Textron experienced a decline of approximately 9% on Friday. The drop was partly attributed to the weaker performance in the Industrial segment and the cancellation of a U.S. Army program.
Still, the analyst emphasized that Textron has other opportunities in the pipeline, particularly with the Department of Defense, supporting the view that the company's prospects in Aviation and Bell are still promising.
InvestingPro Insights
As Textron navigates through its current financial landscape, real-time data from InvestingPro provides additional context for investors. The company's Market Cap stands at a robust $16.52B, and while the P/E Ratio is at 18.27, it shows a more favorable adjusted P/E Ratio for the last twelve months as of Q1 2024 at 15.7.
This suggests a potential undervaluation compared to historical earnings. Revenue growth remains steady at 7.0% for the last twelve months as of Q1 2024, indicating a consistent upward trajectory.
InvestingPro Tips highlight that management's aggressive share buybacks could signal confidence in the company's future, while the RSI suggests the stock might be in oversold territory, presenting a potential buying opportunity.
It is worth noting that Textron has maintained dividend payments for an impressive 54 consecutive years, underscoring its commitment to shareholder returns. For investors seeking a deeper analysis, InvestingPro offers additional tips that could further inform investment decisions. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and discover the 5 additional InvestingPro Tips that could give you an edge in your investment strategy.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.