Recent Posts

Hexcel Corporation (HXL): What Are The Odds The Dreamliner Turns Into A Supplier Nightmare?

We cannot recall another time during our long history in sell-side research when the best idea highlighted from our coverage was: investors should avoid the entire peer group right now. Ultimately, we deemed it more appropriate to shift the note topic to the new developments detected in our propriety channel checks that may be interpreted as bearish by investors. We lowered earnings estimates for two of The Boeing Company suppliers potentially over-levered to the Dreamliner program: Hexcel Corporation (HXL) and Allegheny Technologies (ATI). Continue reading

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8:19 AM

Aerospace: The Runway To Recovery Will Be Long And Bumpy For Upstream Suppliers

Consensus estimates still look aggressive, in relation to fundamentals, for aerospace suppliers levered to premium forge, composite materials, metal fabrication, and raw materials. We believe the tier-3/4 peer group may still be 4-5 quarters away from an inflection point, which could be followed by muted demand in CY22 regardless of the COVID-19 vaccination outcome. After updating various industry models, we generated a CY21 baseline growth forecast for upstream aero suppliers at down 12-13% for CY21. We also lowered estimates on Allegheny Tech (ATI) and Hexcel Corp (HXL) this morning, after completing this market analysis and reviewing the negative survey data points referenced in this report. Continue reading

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8:32 AM

Hexcel Corporation (HXL): A Risky Long Without Stabilization, A Riskier Short With Vaccines

We are moving the investment rating on Hexcel Corporation (HXL) to a HOLD, conceding to a limited number of catalysts looking out 3-4 months. Consistent with views expressed in a recently issued Boeing (BA) upgrade note, we no longer expect valuations and/or investor sentiment around the aerospace peer group to be determined by changing fundamentals. Instead, the trading momentum will most likely be dictated by headlines, with emphasis placed on COVID-19 vaccination updates and/or reported changes to the MAX approval timeline Continue reading

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9:00 AM

Hexcel Corporation (HXL): Results Were Disappointing And This Might Not Be The Bottom For Aero Suppliers

Hexcel Corporation (HXL) kicks off what is likely to be considered an awful earnings week for most aerospace suppliers and the specialty materials group. Not only did the company’s 2Q20 EPS results, reported last night, fall well below expectations due to the pronounced commercial aerospace sales demand weakness and strong inventory headwinds, but we expect any forward-looking commentary to remain guarded. Conservatism would align with the new feedback coming out of the aero channel over the past two weeks. Continue reading

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5:00 PM

Hexcel Corporation (HXL): One Step Forward, And Ten Steps Back? Downgrading The Shares

We are downgrading Hexcel Corporation (HXL) to an UNDERPERFORM recommendation as the shares have traded beyond our target price. More importantly, we are becoming increasingly concerned about the latest information coming out of the aerospace channel, once again suggesting Airbus is about to lower the production rate on the A320. The number being discussed within the channel is 30/month, representing a 25% cut to the current rate – a looming negative catalyst for HXL and many other companies we track in the lower tiers. Continue reading

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5:05 PM
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