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Drexel Now Sees Esterline Technologies As A Margin Recovery Story, Upgrades To Buy

Drexel Now Sees Esterline Technologies As A Margin Recovery Story, Upgrades To Buy
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Drexel Hamilton has upgraded Esterline Technologies Corporation (NYSE: 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).

Related Link: Esterline Reports Q3 EPS $1.38 vs. Est. $1.28, Rev. $517.1M vs. Est. $490M

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.

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Latest Ratings for ESL

Mar 2018BarclaysInitiates Coverage OnUnderweight
Feb 2018Bank of AmericaMaintainsUnderperformUnderperform
Feb 2018Credit SuisseMaintainsUnderperformUnderperform

View More Analyst Ratings for ESL
View the Latest Analyst Ratings

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