Triumph Group stock rating cut following acquisition news

On Monday, Wolfe Research announced a downgrade of Triumph Group (NYSE:TGI) stock rating from ’Outperform’ to ’Peer Perform’. The decision follows the recent development that Triumph Group, currently valued at $1.95 billion with shares trading at $25.19, has entered into an agreement to be acquired by an entity formed under the private equity firms Warburg Pincus and Berkshire Partners. According to InvestingPro data, the stock is currently trading near its 52-week high of $25.34.

The downgrade was also influenced by Triumph Group’s decision to release its fiscal third-quarter earnings ahead of schedule, reporting post-market close on Thursday instead of the following Monday as initially planned. Despite the downgrade, the company’s financial performance exceeded expectations, with EBITDA reaching $56 million, surpassing both Wolfe Research’s and the consensus estimate of $52 million. InvestingPro analysis shows the company’s total EBITDA for the last twelve months stands at $180.64 million, with two key ProTips indicating net income growth expectations and strong liquidity position. Subscribers can access 12 additional ProTips and comprehensive financial analysis through the Pro Research Report.

Triumph Group’s reported sales showed a significant increase of 11% year-over-year, amounting to $316 million. This figure was 3% higher than Wolfe Research’s projections and 8% above the consensus. The company’s EBITDA margins were notably strong at 17.6%, which was 70 basis points higher than Wolfe Research’s estimates, largely due to the Systems & Support segment’s performance that exceeded expectations by more than 100 basis points.

The early earnings report and the subsequent downgrade come amidst the backdrop of the acquisition news, which has introduced new variables into Triumph Group’s stock performance. Triumph’s management highlighted better-than-anticipated cash flow, which also contributed to the overall robust financial results for the quarter.

Investors and market watchers are now observing how the acquisition by the entity under Warburg Pincus and Berkshire Partners will unfold and its impact on Triumph Group’s future operations and stock performance. Meanwhile, the company’s third-quarter results have demonstrated its ability to outperform financial targets, despite the impending changes in ownership and management.

In other recent news, Triumph Group is in the spotlight with several significant developments. The company has been targeted for acquisition by private equity firms Warburg Pincus and Berkshire Partners in an all-cash deal valued at $3 billion. This announcement has led to a flurry of activity among analysts, with Truist Securities raising Triumph Group’s target to $26, matching the acquisition price, while maintaining a Hold rating on the stock. Concurrently, Baird downgraded the company’s rating from Outperform to Neutral but also raised the price target to $26.

Triumph Group has also been making strides in its Actuation Products and Services business, reporting a record $28 million in aftermarket shipments for Boeing (NYSE:BA) 787 and Airbus A380 landing gear systems. These developments come on the back of TD Cowen raising Triumph Group’s share target to $20 based on the company’s stronger-than-anticipated second-quarter performance.

These are recent developments, and as the acquisition deal progresses towards completion, investors will likely monitor the situation closely. The deal is expected to deliver significant value to Triumph Group’s shareholders and is set to take the aerospace supplier private. Analysts’ expectations and the company’s recent performance in aftermarket services underline the dynamic situation around Triumph Group.

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