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TransDigm Group’s Q2 Revenue And Profit Beat Estimates

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TransDigm Group (TDG) beat earnings and revenue estimates in the fiscal second quarter. However, both top and bottom-line numbers declined year-over-year due to the negative impact stemming from the COVID-19 pandemic.

The aerospace manufacturing company’s net sales of $1.19 billion surpassed the Street’s estimates of $1.17 billion but declined 17.3% from the year-ago period.

Earnings decreased 49.4% to $2.58 per share, beating the consensus estimates of $2.51 per share. Additionally, EBITDA for the period decreased 23.1% year-over-year to $519 million.

TransDigm Group CEO Kevin Stein said, “The commercial aerospace industry has continued to show signs of recovery in recent months with the distribution of the COVID-19 vaccine and increasing air traffic, especially in certain domestic markets. We also saw another quarter of strong sequential improvement in our commercial bookings. These trends are encouraging and although the pace of the recovery is uncertain, we remain ready to meet the demand as it returns.” (See TransDigm Corp stock analysis on TipRanks)

Following the fiscal 2Q earnings release, Cowen & Co. analyst Gautam Khanna maintained a Buy rating and a price target of $256.

Khanna said, “March Q aero aftermarket demand inflected higher, & mgmt still expects June/Sept aftermarket demand to exceed H1’s, a mix plus. TDG’s stock remains our top aero aftermarket recovery play.”

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating. That’s based on 2 Buys versus 1 Hold. The average analyst price target of $663.33 implies 10.5% upside potential to current levels. Shares have increased 7.8% over the past six months.

TipRanks’ Hedge Fund Trading Activity tool shows that confidence in TransDigm is currently Neutral, as 12 hedge funds decreased their cumulative holdings of the stock by 775,600 shares in the last quarter.

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