Get 40% Off
🚀 AI-picked stocks soar in May. PRFT is +55%—in just 16 days! Don’t miss June’s top picks.Unlock full list

Morgan Stanley sees TransDigm Group at $1,000 per share, market underestimating earnings growth

Published 05/15/2023, 11:32 AM
Updated 05/15/2023, 11:37 AM
© Reuters. Morgan Stanley sees TransDigm Group (TDG) at $1,000 per share, market underestimating earnings growth
TDG
-

Morgan Stanley analysts reiterated an Overweight rating on TransDigm Group (NYSE:TDG), raising the price target on the stock to $1,000 from $793 in a note to clients Monday.

The analysts said the market is underestimating the aerospace and defense company's earnings growth from higher OE and aftermarket volumes, pricing, and the multiple expansion potential as it closes the valuation gap with peer, Heico.

"We view TransDigm (TDG) as the most defensible business model in commercial aerospace," the analysts declared. "The company has the second highest margin within the Industrials GICS for US companies above a $20bn market capitalization."

They added that over the last decade, TDG has "overcome short thesis after short thesis," and they do not expect the concerns to repeat.

So far this year, TDG shares are up more than 26%, while it has gained more than 44% in the last 12 months.

"TDG is a crowd favorite, but we expect to see TDG's multiples expand further as the market recognizes its unbreakable winning business model, strong earnings potential, and capital deployment upside from further leverage," the analysts added.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.