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On Tuesday, Citi initiated coverage on Curtiss-Wright shares (NYSE:CW) with a Buy rating and set a price target of $410.00, representing potential upside from the current price of $366.92.
The firm's analysis suggests that spending trends and priorities in the Department of Defense (DoD), particularly in areas such as Aircraft, Shipbuilding, and Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance (C4I), are expected to boost revenues in the defense end-market.
According to InvestingPro data, the company has demonstrated strong momentum with a 65% return over the past year.
Citi's analysts predict that increased production rates for new aircraft will likely enhance Aerospace & Industrial aftermarket revenues. Additionally, the growing global demand for energy-efficient solutions is anticipated to ensure steady revenue streams from nuclear original equipment (OE) and aftermarket services.
The firm also foresees Curtiss-Wright becoming net cash positive by 2026 due to a consistent pattern of reducing debt on its balance sheet. This projection is supported by an expected 13% earnings growth through 2027 and consistent cash conversion rates. InvestingPro data confirms the company's solid financial position with a healthy current ratio of 1.98 and moderate debt levels.
The price target of $410.00 set by Citi is based on an EBITDA multiple that is 20% below that of Curtiss-Wright's peers. This conservative valuation indicates potential for further upside should the company's stock undergo a re-rating over time, driven by anticipated award activity across its portfolio. Currently, the company trades at an EV/EBITDA multiple of 21.46x and a P/E ratio of 34.38x.
Citi's positive outlook on Curtiss-Wright reflects confidence in the company's financial strategies and market position within the defense sector, suggesting a promising future for the company's financial performance and stock valuation.
In other recent news, Curtiss-Wright Corporation has made significant strides in the market.
The company recently completed the acquisition of Ultra Energy for $200 million, a strategic move expected to enhance its global commercial nuclear portfolio. Ultra Energy, known for its critical measurement and control systems, reported sales of about $65 million in 2023. The acquisition is anticipated to be accretive to Curtiss-Wright's adjusted diluted earnings per share in the first full year.
Curtiss-Wright also announced a series of financial developments, including a 10% year-over-year sales increase to nearly $800 million in the third quarter of 2024, primarily fueled by growth in the Defense Electronics and Naval & Power segments. As a result, the company has raised its full-year 2024 guidance, now expecting sales growth of 7% to 9% and diluted EPS growth of 12% to 15%.
In addition, the company declared a quarterly dividend of $0.21 per share and announced two new stock repurchase plans set to commence in 2025, with a total budget of $160 million. Deutsche Bank (ETR:DBKGn) initiated coverage on Curtiss-Wright stock with a Buy rating, while Stifel and Truist Securities have both increased their price targets for Curtiss-Wright.
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