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Hexcel Corporation (NYSE:HXL), a leading advanced composites company with large exposure to the commercial original equipment cycle, should be bought by investors given the recent "softness" in the stock, according to Canaccord.
The Analyst
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Canaccord Genuity's Ken Herbert upgraded Hexcel from Hold to Buy with a price target lifted from $70 to $80.
The Thesis
Shares of Hexcel peaked at $73.42 in early June, but have since fallen to around $65 per share. The weakness may not be justified given expectations for growth ahead, Herbert said in a note. After meeting with the management team, the analyst it's apparent the company will see a top-line acceleration this year and next, along with margin and free cash flow improvements.
Revenue growth should come from Hexcel's exposure to the A350, 787, 737MAX, all of which are seeing incrementally higher production schedules, the analyst wrote. While Airbus' lowered its full-year A320neo delivery guidance, Hexcel hasn't seen a slowdown as it's likely Airbus doesn't want to put any incremental risk into its supply chain as it wants to hold its "clear advantage" over Boeing.
Hexcel's growth outlook is superior to most of its peers, most of which is organic, the analyst wrote. Recent strategic investments also solidifies management's ability to execute and technology focused acquisitions is seen as a "sound strategy."
Price Action
Shares of Hexcel were trading higher by 1.2 percent at $67.86 Thursday.
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Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.