HEICO stock price target raised to $355 from $320 at BofA on strong aftermarket growth

Investing.com - BofA Securities raised its price target on HEICO (NYSE:HEI) to $355.00 from $320.00 on Thursday, while maintaining a Buy rating on the aerospace company’s stock. The new target sits near the high end of analyst estimates, which range from $240 to $360, according to InvestingPro data.

The price target increase reflects BofA’s confidence in HEICO’s continued strong organic growth potential, as the firm noted that the current aerospace aftermarket cycle remains robust and can coexist alongside a strong original equipment manufacturer (OEM) cycle. This confidence appears well-founded, with HEICO delivering impressive revenue growth of 17.7% over the last twelve months.

BofA pointed to conversations at the Paris Air Show that reinforced this trend, with HEICO described as the "personification" of the strong aftermarket environment, offering customers relief from price increases typically seen from OEMs.

The investment bank highlighted that HEICO’s value proposition as a complete supplier and cost-savings generator represents a winning strategy to attract new customers while maintaining demand from existing ones.

BofA derived its new $355 price target using a 2.5x relative price-to-free-cash-flow multiple to the S&P 500 on calendar year 2026 estimates, up from the previous 2.4x multiple.

In other recent news, HEICO Corporation has reported a strong financial performance for the second quarter of fiscal year 2025, with earnings per share of $1.12, surpassing the consensus estimate of $1.03. The company’s total revenue increased by 15% year-over-year, exceeding market expectations by 4%, largely driven by an 11% organic growth. The Flight Support Group segment delivered particularly robust results, with organic growth reaching 14% and operating margins at 24.1%. In light of these results, RBC Capital Markets raised its price target for HEICO to $315, maintaining an Outperform rating, while Truist Securities increased its target to $323, sustaining a Buy rating.

Additionally, HEICO Corporation announced a 9% increase in its semiannual cash dividend to 12 cents per share, marking its 94th consecutive semiannual dividend since 1979. Fitch Ratings upgraded HEICO’s Long-Term Issuer Default Rating to ’BBB+’ due to the company’s strong performance and expanding cost-competitive product portfolio. The upgrade reflects HEICO’s predictable revenue streams and its ability to maintain a conservative financial profile.

In contrast, S&P Global Ratings revised its outlook for The Heico Cos. LLC to negative due to high leverage, maintaining a ’BBB-’ rating. The negative outlook is attributed to challenges in the Metal Processing Group and Industrial Technologies Group segments, affecting the company’s ability to reduce leverage. Despite these challenges, growth is expected in other segments, with efforts focused on cost reduction and improved revenue from aerospace and defense end markets.

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