Benchmark maintains Buy on TAT Technologies stock, target at $35

On Wednesday, TAT Technologies (NASDAQ:TATT) secured an expanded maintenance, repair, and overhaul (MRO) partnership with a leading international cargo carrier, projected to be worth between $45 million and $55 million over the next five years. Benchmark analysts have reiterated their Buy rating on TAT Technologies stock, maintaining a $35.00 price target. The company’s strong momentum is reflected in its impressive 99.28% return over the past year, with revenue growth of 30.58% in the last twelve months. According to InvestingPro analysis, the stock currently trades slightly above its Fair Value, suggesting investors should monitor entry points carefully.

The new contract centers on providing maintenance support for an array of aircraft, including Boeing (NYSE:BA)’s 737, 757, 767, 777, and Airbus’s A300. The enhanced agreement is significant for TAT Technologies as it underscores the company’s potential in the auxiliary power unit (APU) market. With a healthy current ratio of 2.87 and operating with moderate debt levels, the company appears well-positioned to execute this contract effectively. Although the cargo carrier’s identity was not disclosed in the press release, TAT Technologies hinted at a strong relationship with major industry players such as UPS, FedEx (NYSE:FDX), and DHL during their first-quarter earnings call on April 24, 2025. The company mentioned existing contracts and potential growth opportunities within these organizations’ product lines.

The deal marks a notable expansion of TAT Technologies’ service offerings and is indicative of the company’s growing presence in the aviation MRO space. The contract is expected to play a pivotal role in TAT Technologies’ business development, as it showcases the firm’s ability to secure sizable agreements with industry-leading entities. InvestingPro data reveals 11 additional key insights about TATT’s financial health and market position, available exclusively to subscribers, along with a comprehensive Pro Research Report that provides deep-dive analysis of the company’s fundamentals and growth prospects.

TAT Technologies boasts a diverse customer base, and while this particular contract may not be with UPS, FedEx, or DHL, it demonstrates the company’s capacity to attract significant contracts within the aviation industry. The value and duration of the contract emphasize TAT Technologies’ competitive position and strategic relationships in the market.

The reaffirmed Buy rating and price target by Benchmark reflect confidence in TAT Technologies’ business trajectory and the anticipated impact of the new MRO partnership on the company’s financial performance over the coming years.

In other recent news, TAT Technologies reported impressive financial results for the fiscal year 2024, with a 34% increase in revenue, reaching $152.1 million, and a 139% rise in net income to $11.2 million. The company’s fourth-quarter performance was particularly strong, contributing $41 million to the annual revenue, exceeding analyst expectations. Benchmark analysts have responded by raising the company’s price target from $30 to $35, maintaining a Buy rating, and highlighting TAT Technologies’ enhanced capabilities in Auxiliary Power Unit (APU) repairs and strategic investments in inventory. These investments are aimed at supporting future growth despite ongoing supply chain challenges.

TAT Technologies’ adjusted EBITDA for the year was $18.6 million, marking a 67% increase from the previous year. The company’s backlog also reached a record high of $429 million, reflecting strong demand for its offerings. Analysts from Benchmark noted that TAT Technologies is well-positioned to capitalize on a $2.5 billion market opportunity with its new qualification to work on Honeywell (NASDAQ:HON) Non-Rotor APU systems. The company expects its strategic focus on high-growth segments like APUs to drive further growth in fiscal year 2025.

Looking ahead, TAT Technologies aims to achieve an EBITDA margin above 15% and anticipates growth across all segments, with the APU segment being a key driver. Despite the challenges, the company remains optimistic about its future growth trajectory.

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