Latest Business News
Textron poised for rebound, says Citi analyst
Strong growth potential supported by backlog and industry dynamics
Citi analyst Jason Gursky believes that aircraft manufacturer Textron is set for a rebound after a lackluster performance in 2023. Initiated with a buy rating, Citi's price target of $90 suggests a 34% increase in the stock over the next 12 months. Gursky is optimistic about Textron's revenue and earnings visibility, citing recent backlog growth, especially in the company's Aviation and Bell segments. With current wait lists for new aircraft stretching more than two years, Textron has experienced backlog growth of up to 360% since 2019, highlighting strong demand.
Positive outlook for private travel and industry supply
Gursky adds that Textron and its peers are well-positioned to manage supply and demand dynamics in the industry. The post-pandemic increase in private travel, coupled with tight industry supply, is expected to benefit companies like Textron. Furthermore, Textron's valuation already considers a recessionary environment and reduced business jet demand, according to Gursky.
Industrial segment evaluated
While Textron's industrial segment lacks significant connective tissue across its automotive, aerospace, and leisure assets, Gursky notes that management has provided capital and the ability to invest in new products. This investment strategy allows the segment to grow.
Increased military spending as a catalyst
Another factor supporting Textron's potential rebound is the rise in military spending. Gursky believes this will create tailwinds for Textron's defense-oriented Bell and Systems segment.
Overall, Textron's stock has seen a decline of more than 5% year to date, underperforming the S&P 500's 15.8% jump during the same period. However, with Citi's positive outlook and the aforementioned growth drivers, Textron may be well-positioned for a turnaround.
Conclusion: Textron's Rebound Offers Opportunity for New Business
Riding the Wave of Textron's Rebound
As Citi analyst Jason Gursky predicts a rebound for Textron, it opens up opportunities for new businesses to capitalize on the company's potential growth. With a strong backlog and favorable industry dynamics, Textron is expected to experience a surge in revenue and earnings. This positive outlook, combined with Citi's buy rating and price target, suggests a significant stock increase in the next year. For new businesses seeking to venture into the aviation sector, partnering with or offering support services to Textron could be a lucrative opportunity.
Private Travel and Industry Supply Advantages
Textron's positioning to manage supply and demand dynamics, along with the expected rise in private travel, presents an attractive environment for new businesses. With current wait lists for aircraft exceeding two years, the demand for aviation products and services is strong. New businesses that can tap into this growth by offering innovative solutions, such as customized aircraft interiors or maintenance and repair services, can position themselves for success.
Expanding Industrial Segment
Despite the lack of significant synergy among Textron's industrial assets, the willingness of management to invest in new products creates room for new businesses to collaborate and provide specialized solutions. Whether it's supplying components for Textron's diverse portfolio or offering technology-driven enhancements, entrepreneurs can find opportunities to partner with Textron and grow together.
Military Spending as a Catalyzing Factor
The projected increase in military spending provides an additional avenue for new businesses to explore. Textron's defense-oriented divisions, Bell and Systems, are set to benefit from this surge. Entrepreneurs with expertise in defense-related technologies or services can leverage Textron's reputation and existing relationships to enter the defense industry and capture a share of the anticipated growth.
Textron's potential rebound, supported by strong industry dynamics and a positive outlook, presents an exciting prospect for new businesses across various sectors. By aligning with Textron or offering complementary services and products, entrepreneurs can position themselves to thrive and ride the wave of Textron's anticipated success.
Article First Published at: https://www.cnbc.com/2023/07/06/citi-says-buy-this-aircraft-maker-with-more-than-30percent-upside.html