Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Heico Corp. Expected to Outperform 'When Fed Funds Slows' - Jefferies

Published 09/20/2022, 03:32 AM
© Reuters.
HEIa
-

By Sam Boughedda

Shares of Heico Corporation (NYSE:HEI) were upgraded to Buy from Hold, with the price target raised to $180 from $160 by Jefferies on Monday.

In a note to investors, an analyst declared that "when Fed Funds slows, Heico goes." In addition, she said the upgrade reflects 11% organic growth in FY23E with an upside to Commercial AM (41% of sales) from an expanding addressable fleet.

"We est. FY22 sales rise 18% y-o-y (+11% organic) w/ a partial recovery in FSG (56% of FY22 sales). We raise our FY23 EPS est by 9% with sales up 23% (11% organic) driven by FSG. M&A adds 7-pts in FY22 and 13-pts in FY23 (vs 5yr avg of 5-pts). We estimate FY23 EPS of $3.10, above cons $3.02, before accounting for upside from commercial AM," she explained further.

The analyst said the aerospace and electronics company outperforms in periods of high organic and inorganic growth.

"On avg in the past 5 years, HEI has reported 5pts of M&A and 2pts of organic growth. In FY19, a period w/ 12pts of M&A and 4pts of organic growth, shares returned 64% vs 5-yr avg of 36%. In periods of rising rates, HEI generates 11pts from M&A vs avg 9pts," the analyst added.

She concluded that it expects Heico's EBIT growth to outperform, while its EPS growth supports the valuation.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.