Oil prices hold sharp losses with focus on secondary India tariffs
Tuesday, UBS has increased its price target on Woodward (NASDAQ:WWD) shares to $220 from the previous $200, while maintaining a Buy rating on the stock. Currently trading at $186.47, Woodward has demonstrated strong momentum with an 8.13% return over the past week. The adjustment follows Woodward’s recent financial performance, which according to UBS analyst Gavin Parsons (NYSE:PSN), has been solid despite several challenges. InvestingPro data shows that 5 analysts have recently revised their earnings estimates upward for the upcoming period, suggesting growing confidence in the company’s outlook. The company’s guidance for the second half of the fiscal year was noted to be conservative, especially considering it projects zero sequential revenue growth compared to the midpoint of revenue guidance for the second quarter. This conservative outlook comes despite Woodward’s healthy revenue growth of 7.38% over the last twelve months and an overall "GOOD" financial health score from InvestingPro’s comprehensive analysis.
Woodward’s aftermarket sector saw strength during the quarter, benefiting from advanced purchases, but the forecast for the second half appears conservative yet prudent. Original equipment (OE) sales were slightly below UBS’s model, but this was not seen as worrying due to Boeing (NYSE:BA)’s ongoing increase in build rates. In contrast, defense OE has shown acceleration, and future prospects are improving, bolstered by increased allocations for munitions in reconciliation processes.
The aerospace margins were aided by a favorable aftermarket mix, although the net price is still anticipated to rise by over 3%. Woodward is expected to manage a gross tariff impact between $10 million to $15 million in the second half of the fiscal year’s guidance. This would require a considerable slowdown in margin performance or incremental revenue to affect the company’s financials significantly.
Lastly, UBS’s analysis suggests that Woodward’s guidance for China truck revenue may also be on the conservative side. With $50 million in revenue expected versus $30 million year-to-date and strong volume, the company’s financial outlook remains robust. The company, now valued at $11.08 billion, has maintained dividend payments for 53 consecutive years, demonstrating long-term financial stability. For deeper insights into Woodward’s financials and growth potential, investors can access detailed metrics and the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Woodward Inc. reported its fiscal second quarter 2025 earnings, surpassing analysts’ expectations with an adjusted earnings per share (EPS) of $1.69, exceeding the forecast of $1.45. The company’s revenue also exceeded projections, reaching $884 million compared to the anticipated $838.83 million. Notably, aerospace sales achieved record levels, particularly in the defense sector, with original equipment sales increasing by 52%. Following these results, Woodward revised its fiscal year 2025 sales guidance to a range of $3.375 billion to $3.500 billion and updated its adjusted EPS guidance to between $5.95 and $6.25. The company anticipates aerospace sales growth between 8% and 13%, while industrial sales are expected to decrease by 7% to 9%. Additionally, Woodward is closely monitoring potential impacts from tariffs and macroeconomic pressures, which could influence its cost structures and demand. The company’s strong performance has been attributed to robust demand in the aerospace sector and strategic operational improvements.
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