On Wednesday, Bernstein analysts maintained a Market Perform rating on Textron shares (NYSE:TXT) with a steady price target of $98.00. According to InvestingPro data, five analysts have recently revised their earnings estimates downward, while the company maintains a GOOD financial health score.
The firm's analysis follows the aftermath of a resolved strike by the International Association of Machinists (IAM) which impacted the company's Q4 production, leading to an expected shift in jet deliveries into 2025.
Textron Aviation's recent strike, lasting approximately four weeks in the fourth quarter, led to a slight decrease in revenue expectations for the quarter, with 34 jet deliveries now anticipated. Despite this, Bernstein analysts forecast a rebound in production, projecting around 153 jet deliveries in 2024 and an increase to 189 in 2025.
Margin expectations remain consistent with previous forecasts. InvestingPro analysis suggests the company is currently undervalued, with strong liquidity metrics showing current assets well exceeding short-term obligations.
With Q4 earnings scheduled for January 22, management's commentary on the jet delivery outlook for 2025 is anticipated to be a focal point during the results discussion. The supply chain will continue to be a critical subject as Textron aims to increase production rates. The company's backlogs are noted to be robust when compared to historical standards. Discover more detailed insights and 8 additional ProTips with an InvestingPro subscription.
Moreover, Textron's Industrial segment is undergoing changes with the anticipated divestiture of its Powersports business. The decision, revealed in December, is a response to prolonged weakness in the Specialized Vehicles market.
Operating with a moderate debt level and maintaining strong cash flows sufficient to cover interest payments, the company is preparing for contract termination costs ranging from $25 million to $35 million, which will be reflected in cash, and inventory write-downs estimated between $30 million and $40 million in Q4. This is expected to result in a roughly $0.30 impact on GAAP earnings per share, which is likely to be excluded from non-GAAP metrics.
In other recent news, Textron Inc (NYSE:TXT). has been the subject of several major developments. The company's stock rating was upgraded from Hold to Buy by Vertical Research Partners, citing Textron's attractive valuation and solid balance sheet. This upgrade follows a year where Textron's shares experienced significant pressure. The company's valuation metrics, including a P/E ratio of 16.4 and EV/EBITDA of 10.2, are below aerospace sector averages.
Textron has also seen adjustments in its financial outlook with Jefferies, a financial services company, reducing its price target for the company's shares to $95.00 from a previous target of $100.00. The firm has also revised its earnings per share (EPS) estimate for Textron in 2024 downward to $5.40, which is below the consensus estimate of $5.53.
In addition, Textron has decided to pause its Powersports production indefinitely due to a decrease in consumer demand. This decision has resulted in increased restructuring charges, now estimated between $190 million and $205 million.
These are among the recent developments for Textron, which also include potential long-term benefits from its Bell business being selected as the winner of the U.S. Army's Future Long-Range Assault Aircraft (FLRAA) competition. This could position Bell as the primary supplier of tactical helicopters to the Army, offering significant growth potential as the V-280 enters full-rate production.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.