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On Monday, Morgan Stanley (NYSE:MS) resumed coverage on Loar Holdings Inc (NYSE: LOAR), assigning the aerospace components manufacturer an Overweight rating and setting a price target of $100. The firm’s analysis highlighted Loar’s effective growth strategy, which has been demonstrated through both organic and inorganic means. The company’s market capitalization currently stands at $8 billion, with a notable year-to-date return of 15.5%.
Loar Holdings has reported approximately an 11% increase in organic growth in the first quarter of 2025. Additionally, the company has experienced margin expansion, with a year-over-year increase of 160 basis points and a sequential improvement of 120 basis points. These figures underscore the company’s adept management and strategic execution, aimed at outpacing the market through various initiatives. These include new product development, strengthening customer relationships, exploring cross-selling opportunities, and utilizing its proprietary portfolio to boost margins. InvestingPro data reveals impressive gross profit margins of 51% and strong revenue growth of 27% over the last twelve months.
The company’s management has also expressed a positive outlook on mergers and acquisitions, citing a robust pipeline of opportunities. This optimism is further supported by Loar’s record bookings in all end markets, indicating a strong demand for its offerings. According to InvestingPro, the company maintains a strong financial health score of GOOD, with 12 additional ProTips available for subscribers.
In their coverage, Morgan Stanley analysts noted that as Loar continues to deliver on its strategic objectives, they anticipate the company will maintain its trading premium compared to peers such as TDG and Heico. The resumption of coverage with an Overweight rating and a price target of $100 reflects the firm’s confidence in Loar’s ongoing performance and future prospects. Based on InvestingPro Fair Value analysis, the stock appears to be trading near its fair value.
In other recent news, Loar Holdings Inc. reported first-quarter earnings that surpassed analyst expectations, with adjusted earnings per share reaching $0.20, compared to the consensus estimate of $0.19. The company’s revenue increased by 24.8% year-over-year, totaling $114.7 million, up from $91.9 million in the same quarter last year. Despite these strong results, Loar Holdings’ stock experienced a decline. The company has raised its full-year 2025 guidance, now projecting net sales between $482 million and $490 million, and adjusted EBITDA between $182 million and $185 million.
Jefferies analyst Sheila Kahyaoglu responded to these developments by increasing the price target for Loar Holdings to $110, maintaining a Buy rating. The analyst highlighted the company’s 11% organic growth and a 22% increase in operating profit, with the Defense sector showing a robust 33% growth. Kahyaoglu also noted an expansion in EBITDA margins by approximately 170 basis points year-over-year. The revised 2025 earnings per share estimate for Loar Holdings is now $0.74, up from the previous $0.71, reflecting the company’s strong quarterly performance and anticipated contributions from acquisitions.
Loar Holdings also reported a significant increase in net income, reaching $15.3 million, compared to $2.2 million in the same period last year. The company achieved its 11th consecutive quarter of adjusted EBITDA growth, rising 30.6% to $43.1 million. CEO Dirkson Charles emphasized the record sales in their Original Equipment, Commercial Aftermarket, and Defense markets, attributing the success to strong demand and operational execution.
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