Goldman Sachs has reiterated its Buy rating on Hexcel Corp . (NYSE: NYSE:), maintaining a price target of $65.00.
The firm’s analysis followed Hexcel’s third-quarter results for 2024, which aligned with consensus expectations in terms of revenue and earnings per share (EPS), but fell short in segment earnings before interest and taxes (EBIT) and free cash flow (FCF).
The company witnessed a high-single-digit sales growth, largely propelled by robust commercial aerospace revenue. This growth occurred despite experiencing slowdowns in the 737 MAX program and the industrial segment.
Hexcel’s segment EBIT margin stood at 14.5%, which was 30 basis points below the implied consensus, leading to a 2% miss in segment EBIT.
Hexcel also updated its full-year 2024 guidance, indicating that revenue and adjusted EPS are anticipated to be at the lower end of its previously stated ranges. The adjustment was attributed to a near-term deceleration in production rate increases previously planned by a key customer. Furthermore, the company has retracted its mid-term guidance for the 2024-2026 period, initially provided during the investor day in February 2024.
In other recent news, Hexcel Corporation reported its Q3 earnings and revenue results. The aerospace materials manufacturer announced adjusted earnings per share of $0.47, marginally surpassing the analyst consensus of $0.46.
However, the company’s revenue of $457 million for the quarter slightly missed the projected figure of $458.18 million. Looking ahead, Hexcel provided full-year guidance that aligns largely with Wall Street forecasts.
The company anticipates earnings per share between $2.02 and $2.18 for the fiscal year 2024, and expects annual revenue to fall within the range of $1.9 billion to $1.98 billion. In other developments, Hexcel’s Board of Directors declared a regular quarterly cash dividend of $0.15 per share.
InvestingPro Insights
To complement Goldman Sachs’ analysis of Hexcel Corp. (NYSE: HXL), InvestingPro data provides additional context for investors. Despite the challenges highlighted in the article, Hexcel maintains a solid financial position with liquid assets exceeding short-term obligations and operates with a moderate level of debt, according to InvestingPro Tips. This financial stability could be crucial as the company navigates the reported slowdown in production rate increases.
The company’s revenue growth of 8.42% over the last twelve months and 10.15% in the most recent quarter, as reported by InvestingPro, aligns with the “high-single-digit sales growth” mentioned in the article. However, investors should note that Hexcel is trading at a high earnings multiple, with a P/E ratio of 49.56, which may reflect market expectations for future growth despite the current headwinds.
An InvestingPro Tip indicates that management has been aggressively buying back shares, which could signal confidence in the company’s long-term value proposition. This action, combined with Goldman Sachs maintaining its Buy rating, suggests potential upside despite the near-term challenges outlined in the article.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips that could provide further insights into Hexcel’s financial health and market position.
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