TD Cowen analyst Cai von Rumohr maintained a Buy rating on Textron (TXT – Research Report) yesterday and set a price target of $88.00.
Cai von Rumohr has given his Buy rating due to a combination of factors centered around Textron’s promising future in the aviation sector and a robust share repurchase strategy. Textron’s aviation division is poised for improved performance in the coming years, with management indicating that supply chain issues have begun to ease and labor efficiency is expected to rise due to stabilized headcount. The healthy demand for aircraft is evident from a solid backlog-to-bill ratio and net pricing gains in the fourth quarter. Moreover, Textron’s guidance suggests a significant increase in business jet deliveries, which, combined with enhanced efficiency, is likely to boost margins towards the higher end of their guidance range, reflecting a substantial incremental margin increase.
In addition to the promising outlook for aviation, Textron’s Bell division is navigating through a period of transition with a projected sales increase supported by FLRAA development and higher commercial deliveries, despite a decline in mature programs. The anticipated stability in margins is attributed to increased commercial volumes, closeouts of mature programs, and savings from a recent restructuring. While 2024 may not be a pivotal year for significant program decisions, the overall earnings outlook for Textron remains strong, driven by the aviation segment, with additional contributions from share repurchases. While less visibility exists beyond the aviation segment’s performance and repurchase benefits, the potential for commercial volume at Bell and key program decisions for the Systems division highlight Textron’s diversified opportunities for growth.
According to TipRanks, von Rumohr is a 5-star analyst with an average return of 6.4% and a 63.23% success rate. von Rumohr covers the Industrials sector, focusing on stocks such as General Dynamics, Boeing, and Textron.
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Textron (TXT) Company Description:
Textron, Inc. is a multi-industry company, which leverages global network of aircraft, defense, industrial, and finance businesses to provide customers innovative solutions and services. The company operates its business through the following segments: Textron Aviation, Bell, Textron Systems, Industrial, and Finance. The Textron Aviation segment manufactures sells, and services Beechcraft and Cessna aircraft. The Bell segment supplies military and commercial helicopters, tiltrotor aircraft, and related spare parts. The Textron Systems segment product lines consist of unmanned aircraft systems; land and marine systems; weapons and sensors; and a variety of defense and aviation mission support products and services. The Industrial segment designs and manufactures a variety of products under the Golf; Turf Care and Light Transportation Vehicles; Fuel Systems and Functional Components and Powered Tools; and Testing and Measurement Equipment product lines. The Finance segment consists of Textron Financial Corp. and its consolidated subsidiaries, which provides finances primarily to purchasers of new Cessna aircraft and Bell helicopters. The company founded by Royal Little in 1923 and is headquartered in Providence, RI.
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