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.
Canaccord Genuity's Ken Herbert upgraded Hexcel from Hold to Buy with a price target lifted from $70 to $80.
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."
Shares of Hexcel were trading higher by 1.2 percent at $67.86 Thursday.
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Latest Ratings for HXL
|Jul 2018||Canaccord Genuity||Upgrades||Hold||Buy|
|Apr 2018||Credit Suisse||Maintains||Neutral||Neutral|
View More Analyst Ratings for HXL
View the Latest Analyst Ratings
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