On Friday, Baird maintained an Outperform rating on Textron (NYSE:TXT) shares but reduced the price target to $100 from $109. The adjustment comes in the wake of a five-week strike at Textron Aviation operations in Wichita, Kansas, which has impacted the company's delivery schedule for 2024.
The strike has led to a decrease in the expected earnings per share (EPS) for Textron in 2024, now set at $5.45, a $0.80 reduction from previous estimates. The EPS forecast for 2025 has also been lowered to $6.90, reflecting a more conservative outlook for the Industrial performance of the company, marking a $0.20 decrease.
Despite the strike and its effects on the company's near-term financials, Baird's analysis suggests a recovery on the horizon for Textron. With employees already returning to work, the firm anticipates a ramp-up in deliveries for 2025, which is expected to support the company's growth trajectory.
The report also notes that Textron's management has been very active with buybacks, a factor that could provide additional support to the stock. The revised price target of $100, though lower than the previous target, reflects Baird's continued positive outlook on Textron's stock as the company moves past the strike's disruptions and towards a favorable recovery in the following year.
In other recent news, Textron Inc (NYSE:TXT). has experienced a mix of highs and lows in its recent financial developments. The company's third-quarter earnings showed a slight increase in revenue, rising to $3.4 billion from the previous year's $3.3 billion.
However, adjusted income from continuing operations fell to $1.40 per share, down from $1.49 per share a year ago. A four-week strike in the Aviation segment, which has now ended with a new contract, is expected to significantly impact the financial results of 2024.
In the face of these challenges, UBS has taken a cautious stance on Textron, reducing the company's price target to $79 from $87 and maintaining a Sell rating on the stock. This decision follows Textron's third-quarter earnings miss and a downward revision of its earnings per share (EPS) and free cash flow (FCF) forecasts. The analysis by UBS suggests that the business jet segment remains a significant factor influencing Textron's stock value.
Despite these setbacks, Textron's Bell segment showcased growth with revenues increasing to $929 million. This growth is attributed to the progression of the FLRAA program. On the other hand, Industrial revenues saw a decline due to lower demand in Specialized Vehicles.
Textron has now revised its adjusted EPS for 2024, expecting it to be between $5.40 and $5.60, down from the previous forecast of $6.20 to $6.40. However, the company expects a healthy revenue progression in 2025. These are the recent developments in the company.
InvestingPro Insights
Recent data from InvestingPro provides additional context to Baird's analysis of Textron (NYSE:TXT). Despite the recent challenges, including the strike at Textron Aviation, the company's financials show some resilience. Textron's revenue for the last twelve months as of Q3 2024 stands at $13.98 billion, with a modest growth of 4.13% over the same period.
InvestingPro Tips highlight that Textron has maintained dividend payments for 54 consecutive years, demonstrating a long-term commitment to shareholder returns. This consistency aligns with Baird's positive outlook on the stock, even in the face of short-term setbacks.
Furthermore, the company's management has been aggressively buying back shares, which supports Baird's observation about active buybacks potentially providing additional stock support. This strategy, combined with Textron's high shareholder yield, suggests a focus on creating value for investors.
The current P/E ratio (Adjusted) of 14.94 indicates that the stock may be reasonably valued, especially considering Baird's maintained Outperform rating. Additionally, InvestingPro data shows that Textron's fair value based on analyst targets is $100, which closely aligns with Baird's revised price target.
For investors seeking a more comprehensive analysis, InvestingPro offers 8 additional tips for Textron, providing a deeper understanding of the company's financial health and market position.
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