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Investing.com - Stifel initiated coverage on TAT Technologies (NASDAQ:TATT) with a Buy rating and a $44.00 price target on Monday. The aviation services company, currently trading at $38.57 with a market capitalization of $494 million, has demonstrated remarkable performance with a 114% return over the past year. According to InvestingPro analysis, the stock appears to be trading near its Fair Value.
The research firm highlighted TAT Technologies’ successful refocusing of its business on aviation MRO (maintenance, repair, and operations) services, which it considers an attractive growth area.
Stifel noted that TAT’s growth will benefit from long-term agreements that are still ramping up, supported by a large backlog, while margin expansion is expected to continue due to better mix, operating leverage, and improved operations.
The firm also pointed to attractive opportunities for TAT to invest incremental capital in targeted bolt-on acquisitions to expand its addressable market, supported by a strong balance sheet with net cash position.
Stifel expects mid-teens cash and earnings growth to support an above-market valuation for TAT, adding that the elimination of legacy PE ownership overhang was a positive first step in the investor familiarization process, with eventual redomiciliation to the US as a natural next step.
In other recent news, TAT Technologies Ltd. has secured a three-year contract valued at approximately $12 million to provide maintenance, repair, and overhaul services for Auxiliary Power Units used on Boeing 777 aircraft. This contract is expected to generate about $4 million in annual revenue for the company. Additionally, TAT Technologies announced a new $10 million contract with a leading Israeli defense integrator, bringing its total expected revenues from defense sector contracts to $22 million year-to-date. These agreements include both original equipment manufacturing and maintenance services for the Israeli Air Force and defense integrators.
Furthermore, Lake Street Capital Markets has initiated coverage on TAT Technologies with a Buy rating, setting a price target of $37.00. The firm describes TAT Technologies as a "classic overlooked microcap investment opportunity" with a growing backlog that positions the company for above-average revenue and earnings growth compared to its industry peers. These developments highlight the company’s expanding presence in both the commercial aviation and defense sectors.
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