What Happened?
Shares of aerospace and defense company Hexcel (NYSE: HXL) jumped 2.1% in the afternoon session after UBS upgraded the aerospace materials company to Buy from Neutral and significantly raised its price target.
The investment firm boosted its price target on the stock to $80 from $65, citing an expected increase in widebody aircraft production in 2026 as a key growth driver. UBS analyst Gavin Parsons projects that the production ramp-up will generate mid-teens revenue growth for Hexcel, along with a 300 basis point margin expansion. While acknowledging potential challenges in the third quarter from Airbus A350 destocking, UBS views this as a likely trough for revenue and margins before a multi-year aircraft production increase begins. The firm anticipates a 5-7% upside to consensus EBITDA estimates for Hexcel in 2026 and 2027.
After the initial pop the shares cooled down to $64.50, up 2.1% from previous close.
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What Is The Market Telling Us
Hexcel’s shares are not very volatile and have only had 3 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 4 months ago when the stock dropped 9.9% on the news that the company reported weak first quarter 2025 results. Its revenue, EPS, and EBITDA missed analysts' estimates. Hexcel also cut its full-year revenue and profit forecasts in response to continued supply chain delays. A key concern was the commercial aerospace sales which dropped over 6%, hit hard by slower production on jets like the 787 and A350. That dragged overall sales down 3%, and profits dropped too, with lower volumes making it harder to cover fixed costs. Defense and space did okay, up almost 3%, but that just wasn't enough to balance out the hit in commercial. Overall, this quarter could have been better.
Hexcel is up 4.4% since the beginning of the year, and at $64.50 per share, it is trading close to its 52-week high of $70.69 from January 2025. Investors who bought $1,000 worth of Hexcel’s shares 5 years ago would now be looking at an investment worth $1,606.
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