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Thursday February 10, 2022, 09:13:42

Hexcel Corporation (HXL): Upgrading Shares To Strong Buy Rating Ahead Of Potential Trading Catalysts

By Chris D. Olin

This looks like an interesting point in time for investors to turn more aggressive on Hexcel Corporation (HXL) despite the muted outlook for wide-body aircraft and BA787 aircraft program. Focusing on the improving macro environment, rebounding aerospace supplier survey data points, temporary lull in military-related demand, and favorable cost structure, we anticipate a steady improvement in top-line growth and operating margins over the next few quarters. As such, we now expect HXL to reach the high-end of the full-year guidance range (if not exceed) on Airbus supply chain sourcing strength. Continue reading

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Wednesday September 29, 2021, 03:44:55

Hexcel Corporation (HX): Downgrading Shares To Outperform On Reduced Near-Term Earnings Visibility

By Chris D. Olin

Hexcel Corporation is one of the companies positioned within the aerospace supply channel with elevated exposure to the market headwinds we highlighted in prior notes, including a destabilized 787 aircraft program (following a pullback in monthly build rates) and volume disruptions associated with extended military production bottlenecks. This morning, we lowered estimates on HXL to fully discount a delayed sales recovery risk or weaker-than-expected shipments to key customers like Boeing and Lockheed Martin. With respect to the limited near-term earnings visibility, we also downgraded the shares to OUTPERFORM (versus Strong Buy). Continue reading

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Friday June 4, 2021, 08:28:50

Aerospace: Upgrading Upstream Suppliers On Stronger Aero Sales Outlook And Potential Bottleneck Benefits

By Chris D. Olin

We are making a rotational call within the aerospace coverage group, now favoring upstream suppliers that appear to be positioned to benefit from a changing commercial aircraft production environment. The investor narrative may shift to the premium forgers and/or specialty materials providers earlier-than-expected as the supply chain readies for a sharp inflection in demand for 737MAX or A320neo applications, looking beyond negative near-term earnings expectations. As such, we are changing ratings on a few companies that fit into that description. Today, we are formally upgrading Hexcel Corporation (HXL) and Haynes International (HAYN) to Strong Buy investment ratings and moving Allegheny Technologies (ATI) over to Outperform. We had previously rated all three Hold. Continue reading

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Wednesday April 28, 2021, 12:45:44

Hexcel Corporation (HXL): One Step Closer To Stability, Assuming The Aircraft Production Rates Hold

By Chris D. Olin

We came away from the latest Hexcel Corporation (HXL) quarterly earnings update and investor call somewhat intrigued by the latest market outlook, continuation of the cost reduction strategy, and uptick in confidence communicated by the management team. We would consider a rating change should the shares pullback and market intelligence confirm a reversal in upstream demand. Our hesitancy relates to the unfavorable macro environment and expected change in wide-body aircraft schedules (lower for longer). Continue reading

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