How are energy investors positioned?
On Thursday, Benchmark increased its price target for TAT Technologies (NASDAQ:TATT) shares to $35.00, up from the previous $30.00, while continuing to recommend a Buy rating for the stock. Currently trading at $26.26, TATT has demonstrated remarkable momentum with a 131.49% return over the past year, according to InvestingPro data. The firm’s analysts highlighted TATT’s impressive fourth-quarter performance in 2024, which surpassed expectations in terms of revenue and profit margins. This marked the ninth consecutive quarter of growth for the company.
Analysts at Benchmark noted that TATT’s success could be attributed to several factors, including its expanded capabilities in Auxiliary Power Unit (APU) repairs, the emerging landing gear cycle, contributions from leasing and trading operations, and robust demand for heat exchangers. With an InvestingPro Financial Health Score of 2.88 (rated as "GOOD") and strong revenue growth of 33.68% over the last twelve months, they believe that TATT is effectively increasing its market share despite broader macroeconomic concerns.
The company’s adjusted EBITDA margin for the fiscal year 2024 showed a notable improvement, rising to 12.2% from 9.7% year-over-year, with EBITDA reaching $17.48 million. This improvement demonstrates TATT’s strategic focus on increasing profitability. Moreover, TATT’s enhanced APU capabilities are expected to gain further momentum in fiscal year 2025, with potential order flow increases anticipated throughout the year.
TATT has now become qualified to work on Honeywell (NASDAQ:HON) Non-Rotor APU systems, which are used on 25,000 aircraft globally, representing a $2.5 billion market opportunity. The recent expansion of TATT’s inventory, despite impacting free cash flow in the fourth quarter of 2024, positions the company to capitalize on order flows in the coming fiscal year.
In conclusion, Benchmark’s analysts reiterated their buy rating, expressing confidence in TATT’s continued growth trajectory and its ability to capitalize on significant market opportunities in the fiscal year 2025. While the stock currently appears overvalued according to InvestingPro’s Fair Value analysis, its attractive PEG ratio of 0.28 suggests strong growth potential relative to its current valuation. Discover more insights and 10 additional ProTips for TATT, along with comprehensive research reports covering 1,400+ US stocks, exclusively on InvestingPro.
In other recent news, TAT Technologies reported impressive financial results for fiscal year 2024. The company achieved a 34% increase in annual revenue, totaling $152 million, surpassing Benchmark analysts’ estimate of $149 million. The fourth quarter alone saw revenues of $41 million, exceeding the anticipated $38 million. TAT Technologies also reported a 67% increase in adjusted EBITDA for the year, reaching $18.6 million, slightly above the forecast of $18.1 million. Net income rose significantly by 139% to $11.2 million, while earnings per share for the year increased by 95% to $1.00.
Additionally, TAT Technologies’ backlog reached a record high of $429 million, reflecting strong demand for its offerings. Despite ongoing supply chain challenges, the company strategically invested in inventory to support future growth, resulting in a negative cash flow of $5.8 million. Analysts at Benchmark have maintained a Buy rating on TAT Technologies with a price target of $30, highlighting confidence in the company’s financial health and growth prospects.
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