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Canaccord: Now Is The Time To Buy Hexcel

Canaccord: Now Is The Time To Buy Hexcel

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

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.

Related Links:

Stephens' Analysts Present Their Best Ideas For 2018

Goldman On Aerospace: Avoid Original Equipment, Own Aftermarket; Hexcel Downgraded

Latest Ratings for HXL

Apr 2021Credit SuisseMaintainsUnderperform
Mar 2021Goldman SachsDowngradesNeutralSell
Mar 2021BarclaysUpgradesUnderweightEqual-Weight

View More Analyst Ratings for HXL
View the Latest Analyst Ratings


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