On Wednesday, TransDigm Group Incorporated (NYSE:TDG), a leading aerospace manufacturer, saw its price target increased by TD Cowen from $1,300 to $1,400. The firm maintained a ‘Buy’ rating on the stock, signaling continued optimism about the company’s financial health and market position.
The aerospace company recently reported a robust performance in the second quarter, with sales, EBITDA, and EPS figures surpassing expectations. This outperformance has led to an upward revision of the full-year 2024 guidance, with EPS forecasts increasing by 5% and EBITDA by 1.5%. The positive adjustments were attributed to higher interest income, improved margins, and a strong first-half defense segment showing.
Despite anticipated decreases in non-passenger aerospace subsegments like business jets, helicopters, and freighters, TransDigm’s aftermarket (A/M) growth is expected to remain around 15% in the second half of the year. This projection is supported by a robust second-quarter aftermarket book-to-bill ratio and a higher rate of aftermarket sell-through compared to sell-in.
TD Cowen’s new price target of $1,400 for TransDigm reflects a valuation of 23 times the calendar year 2024 estimated enterprise value to EBITDA (EV/EBITDA). The increase in the price target and the sustained ‘Buy’ rating underscore the firm’s confidence in TransDigm’s financial trajectory and its ability to maintain a strong position in the aerospace market.
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