Triumph Group's Valuation Is 'Too Attractive To Ignore'

In a report published Tuesday, Credit Suisse analyst Robert Spingarn reiterated an Outperform rating on

, but lowered the price target from $89.00 to $79.00. In the report, Credit Suisse noted, "With this note, Rob Spingarn assumes lead coverage of TGI. We reiterate the firm's prior OP rating as the negative surprises appear largely over and, at a minimum, better understood, and given that the current valuation yields a favorable risk/reward outlook, especially in the context of our updated FY'15-17E forecast of $5.68/$6.02/$6.60 from $5.84/$6.82/$7.55." The report continued, "We acknowledge continued concerns around 1) a suboptimal portfolio in Aerostructures; 2) remaining execution risk in Aerostructures; and 3) incremental exposure from the Gulfstream deal, but we think these issues are now priced in. With shares trading at just <10.0x our FY'16E and an appealing 7.7% FCF yield (vs. peers at ~4%), we feel the valuation is too attractive to ignore, especially with the momentum in the more highly regarded Systems business where the top 3 programs are growing. Our lower TP of $79 reflects our reduced forecast and embeds a peer discount for Aerostructures risk." Triumph Group closed on Friday at $61.33.