Hexcel Corporation (HXL) Shares Gain Almost 10% on Huge Airbus Contract; Brokerage Firms Should Take Notice

May 30, 2008 10:24 AM EDT

Hexcel Corporation (NYSE: HXL) shares gain almost 10% after the company was awarded a contract to supply carbon fiber composite materials for major primary structures of the Airbus long-range wide-body A350 XWB aircraft. The award covers the entire family of A350 XWB aircraft through 2025. In the coming months, as the A350 XWB design is finalized, Hexcel and Airbus have agreed to complete the final specification and qualification of Hexcel’s materials for the selected primary structures. Hexcel expects the award to generate revenues of $4-5 billion over the life of the contract.

Shares of HXL have been relatively flat for the past 52 weeks, trading in a range between $17-27, however, this contract will help generate more revenues, which could lead to higher P/E multiple and then maybe some upgrades from brokerage firms.

The most recent analyst actions were: UBS initiated coverage on HXL with a Buy on Dec. 17, 2007, Wedbush Morgan upgraded HXL from Hold to Buy on Sept 25, 2007 and BofA initiated coverage on HXL with a Neutral on Sept 14, 2007.

Hexcel Corporation (Hexcel) is an advanced composites company. Hexcel develops, manufactures and markets lightweight, high-performance composites, including carbon fibers, reinforcements, prepregs, honeycomb, matrix systems, adhesives and composite structures, for use in the commercial aerospace, space and defense and industrial applications. [SM]

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