Deutsche Bank Upgrades Hexcel Corp. (HXL) to Buy
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Deutsche Bank upgrades Hexcel Corp. (NYSE: HXL) from Hold to Buy with a $10 price target, citing valuation.
The firm said, "We have always been attracted to the carbon-fiber composite story, which reduces the normal cyclical risks embedded within plain-vanilla Aerospace suppliers. At the current multiple of 4.3x 2009E EBITDA, the traditional valuation barrier is no longer there and so we see the potential for relative multiple expansion to drive out-performance, and now see sufficient upside potential vs. our reduced $10 target price to upgrade our rating from Hold to Buy."
The firm mentions that it may be counter-intuitive to upgrade an Aerospace supplier at this point in the cycle, but the firm believe that rising carbon-fiber composite density on newer platforms, ramping glass-fiber volumes into wind markets, start-up on the USEC nuclear contract and stable Defense sales can substantially offset negative Airbus and Boeing OEM volumes.
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