Truist Securities has adjusted its price target for Hexcel Corp . (NYSE: NYSE:HXL), a leading manufacturer of advanced composite materials, to $76 from the previous target of $78, while keeping a Buy rating on the stock.
The revision follows a decrease in the company's 2024 outlook last quarter and a 20% year-to-date decline in the stock's value. Truist Securities acknowledges the challenges Hexcel faces, including ongoing supply chain and quality issues, as well as the impact of the Boeing (NYSE:BA) strike. These factors have led to a conservative adjustment of estimates, reflecting the potential risks to aircraft production.
The analyst from Truist Securities noted the possibility that management's 2026 target model might be at risk. Despite these concerns, the firm believes that the anticipated return to peak revenue levels, driven by the 787 and A350 aircraft programs, presents a compelling case for long-term investors. The expectation is that any current weakness in the stock is likely to be temporary.
In other recent news, Hexcel Corporation has reported a 10% year-over-year increase in their second-quarter sales, reaching $500 million. However, due to supply chain challenges and a reduction in Airbus deliveries, the company has adjusted its 2024 guidance, now anticipating sales to range between $1.9 billion and $1.98 billion, with adjusted diluted earnings per share of $2.02 to $2.18.
On a different note, Deutsche Bank (ETR:DBKGn) has revised its price target for Hexcel, reducing it from $65 to $62, while maintaining a Hold rating on the stock. This adjustment reflects recalibrated earnings estimates for 2024 through 2026, based on revised production rate assumptions for Boeing and Airbus.
Simultaneously, L3Harris Technologies (NYSE:LHX) has experienced a downgrade from Outperform to Sector Perform by RBC Capital, which also lowered the company's price target to $240 from $250. This adjustment follows the second quarter of 2024 earnings cycle in the Aerospace & Defense sector, which showed a modest top-line growth of approximately 10% organically for defense stocks. Lastly, Jefferies has maintained a 'Hold' rating on Hexcel stock, highlighting the company's strong long-term contracts with key aerospace players like Airbus. =
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Hexcel Corp.'s financial position and market performance. The company's market capitalization stands at $5.09 billion, with a P/E ratio of 48.65, indicating that investors are willing to pay a premium for the stock despite recent challenges. This high valuation aligns with the InvestingPro Tip that Hexcel is "trading at a high earnings multiple."
On a positive note, Hexcel has demonstrated revenue growth, with a 10.15% increase in quarterly revenue as of Q2 2024. This growth trajectory supports Truist Securities' view on the company's potential for long-term investors. Additionally, an InvestingPro Tip highlights that "management has been aggressively buying back shares," which could signal confidence in the company's future prospects.
However, it's worth noting that 7 analysts have revised their earnings downwards for the upcoming period, according to another InvestingPro Tip. This aligns with Truist Securities' conservative adjustment of estimates due to ongoing challenges.
For investors seeking a more comprehensive analysis, InvestingPro offers 6 additional tips that could provide further insights into Hexcel's financial health and market position.
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