US stock futures edge lower after S&P 500 hits record high; PCE data in focus
On Tuesday, UBS analyst Gavin Parsons (NYSE:PSN) increased the price target on StandardAero Inc (NYSE: SARO) to $30 from $25, while maintaining a Neutral rating on the company’s shares. With the stock currently trading at $29.96 and sporting a notably high P/E ratio of 765, Parsons highlighted the company’s ability to expand margins and achieve double-digit organic growth. He pointed to StandardAero’s successful execution in the face of end-market tailwinds and its strategic investments in platforms such as the LEAP engine. According to InvestingPro data, three analysts have recently revised their earnings estimates upward for the upcoming period.
Despite the positive performance, Parsons noted that the company’s growth trajectory requires significant cash investment, which can dilute margins. This concern is reflected in StandardAero’s current gross profit margin of 14.5%, which InvestingPro analysis identifies as relatively weak. He also mentioned that the consensus market estimates already factor in double-digit earnings growth for StandardAero. As a result, although the company has been establishing a strong track record, Parsons believes that the potential for valuation re-rating is gradual.
The UBS analyst’s comments suggest that while StandardAero is performing well, the current market expectations and the revised price target leave limited room for significant stock appreciation. This perspective is reflected in the decision to maintain a Neutral stance on the stock, despite the positive outlook on the company’s operational execution and growth strategy. Based on comprehensive InvestingPro Fair Value analysis, the stock appears to be trading above its intrinsic value, with analyst targets ranging from $30 to $37.
StandardAero, known for its involvement in the aerospace industry, has been focusing on expanding its capabilities and improving its operational efficiency. With annual revenue of $5.4 billion and EBITDA of $616 million, the company’s investment in new technologies and platforms, such as the LEAP engine, is part of its growth plan, aiming to capitalize on the increasing demand in the aerospace sector.
The updated price target of $30 by UBS signifies an adjustment to the firm’s valuation model, taking into account StandardAero’s recent performance and market conditions. This new target provides investors with an updated benchmark for the company’s stock value based on the latest available information and analysis. For deeper insights into StandardAero’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, along with 12 additional ProTips and extensive financial metrics available on InvestingPro.
In other recent news, StandardAero Inc. reported strong financial results for the first quarter of 2025. The company achieved a 16% year-over-year increase in revenue, reaching $1.4 billion. Net income also saw a significant rise, jumping from $3 million in the previous year to $63 million. The adjusted EBITDA margin improved by 40 basis points to 13.8%, while adjusted EBITDA itself rose by 20% to $198 million. Analysts noted that the company’s earnings per share matched market expectations, and the revenue met forecasts, underscoring its solid market positioning.
StandardAero’s commercial aerospace segment experienced an 18% growth, bolstered by strategic expansions and the integration of AeroTurbine. Business aviation and military segments also showed positive momentum, growing by 13% and 10%, respectively. The company has projected its 2025 revenue to be between $5.825 billion and $5.975 billion, with adjusted EBITDA anticipated in the range of $775 million to $795 million. Analysts from firms like JPMorgan and Wolfe Research expressed interest in StandardAero’s strategic initiatives, including its LEAP program and M&A opportunities. The company continues to focus on expanding its engine component repair capabilities and maintaining a healthy backlog for its LEAP engines.
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