Drexel Hamilton has upgraded Esterline Technologies Corporation ESL to Buy from Hold and set a target price of $86, citing margin recovery opportunities.
Over the past two years, Esterline has been focusing on efficiency through lean initiatives (E3), strategic sourcing and global footprint optimization. It has also been dealing with a State Department mandated export compliance program.
"Post the 3QFY16 earnings call on August 4, we've come to view ESL as a margin recovery story with good FCF characteristics where one-off non-operating charges should be less and less impactful to numbers," analyst Pete Skibitski wrote in a note.
The analyst said the third quarter brought clarity to the progress being made and he sees much of the charges related to the above initiatives ending by second quarter FY17 (March 2017).
Skibitski expects adjusted operating margins of 9.7 percent in FY16, rising to 10.6 percent in FY17 and 11.7 percent in FY18. Further, the analyst projects $4.51 in FY16 adjusted EPS and sees FY17 EPS of $4.92 excluding items.
At time of writing, shares of Esterline were up 5.71 percent on the day, trading at $74.58.
Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email feedback@benzinga.com with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
