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Investing.com - UBS raised its price target on TransDigm (NYSE:TDG) to $1,798.00 from $1,738.00 on Thursday, while maintaining a Buy rating on the aerospace components manufacturer. Currently trading at $1,307.97, TransDigm shows a potential 18% upside to analyst targets, according to InvestingPro data.
The investment firm’s analysis focuses on TransDigm’s ability to compound earnings despite bear arguments about harder M&A conditions, aftermarket growth underperforming peers, and earnings growth disappointment.
UBS acknowledges increased M&A competition but notes TransDigm continues to complete acquisitions, while the company’s aftermarket underperformance is already reflected in its valuation, which has de-rated accordingly.
The firm addresses earnings growth concerns by highlighting that TransDigm is absorbing a $600 million increase in interest expense for $9.6 billion in special dividends while still guiding for $1 billion in EBITDA growth from fiscal 2024 to 2026.
UBS projects TransDigm can achieve a 19% compound annual growth rate in free cash flow per share without additional acquisitions, making the stock attractive at 19 times EBITDA for both investors and for the company’s share repurchase program.
In other recent news, TransDigm Group Incorporated reported impressive financial results for the fourth quarter of fiscal year 2025, exceeding analysts’ expectations. The company achieved an earnings per share (EPS) of $10.82, surpassing the anticipated $10.07, which marks a 7.45% surprise. Revenue also outperformed projections, reaching $2.44 billion compared to the forecasted $2.4 billion. Despite these strong results, Stifel lowered its price target on TransDigm to $1,650 from $1,710, maintaining a Buy rating. Stifel described the fourth-quarter results as "business-as-usual," highlighting strong organic growth and margins. The adjustment in the price target reflects a conservative outlook moving forward. These developments provide investors with critical insights into TransDigm’s recent performance and market evaluations.
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