Textron Aviation to drive 2024 to 2025 gains - TD Cowen

investing.com:

TD Cowen analysts raised the price target on Textron (NYSE:TXT) to $88 from $86 per share in a note Monday, maintaining an Outperform rating on the stock.

Analysts said the company's Aviation business will likely drive the company's 2024 to 2025 gains.

«Deliveries have been restrained by supply chain disruptions and likely will be flattish in 2024-25, which assumes that labor in the Wichita area and supply chain remain challenging,» said the analysts. «Pricing remains strong sector-wide, and we look for incremental margins in 2024-25 in line with mgmt's guide of 20-25%, although this could have opportunity if supply chain issues abate.»

The firm notes that the cyclical slowing in demand is a potential issue but believes revenues in 2025 will be bolstered by initial new product deliveries, the first deliveries under NetJets blanket option, and the continuing build in Sky Courier shipments.

Furthermore, TD Cowen believes «Bell is positioned for M/HSD revenue gains in 2024-25 driven by ramp in FLRAA development.»

«Combined with recovering commercial volume (fewer supply chain disruptions) and potential initial Bell 525 deliveries in 2025, these should outweigh H-1 production end in 2023 and gradually easing in V-22 revenue,» added the analysts. «Margins will ease as mix shifts to lower margin cost-plus FLRAA billings, but total profits should be up slightly.»