Bank of America analysts upgraded Textron (NYSE:TXT) from Neutral to Buy on Friday, and raised the price target from $85 to $105.
Despite an impressive year-to-date performance among large-cap stocks, investors remain worried about the Industrial sector, a decline in business jet demand, and unfavorable defense market perceptions.
This, in turn, has resulted in a valuation for Textron that is approximately one standard deviation below its historical average, BofA said.
“In our view, we find this surprising on account of 1) continued bizjet demand and robust backlog, 2) a strong balance sheet that sets the scene for another strong year of buybacks, and 3) strong Bell sales on the Future Long Range Attack Aircraft (FLRAA) program ramp,” the analysts wrote.
Regarding business jets (bizjet), the 2024 forecast suggests continued robust Aviation volumes, the analysts added. Moreover, Textron concluded the year with a book-to-bill (BTB) ratio of 1.15x, surpassing its 2023 goal of 1.0x.
“Despite concerns of waning bizjet demand, TXT, along with other bizjet OEMs (i.e., GD), continue to see strong demand through the 2020s.”