Astronics (ATRO) PT Raised to $90 at TD Cowen

TD Cowen analyst Gautam Khanna raised the price target on Astronics (NASDAQ: ATRO) to $90.00 (from $85.00) while maintaining a Buy rating.

The analyst comments "ATRO's C26 outlook has upside from higher Boeing 737Max production rates, potential tariff relief ($20MM EBIT hit in guide), operating leverage, and perhaps, incremental pricing. PT moves to $90, approx. 19.2x C26 EV/EBITDA. (1) C26 Outlook Has Upside - C26 sales guidance of $950-990MM & 40-50% incremental margin, which portends Y/Y EBIT gains of 37-56%, seems to have upside. E.g. ATRO's forecast assumes that Boeing's rate hikes occur 3-5 months later than what is likely. Should Boeing hit its plan (e.g., 737Max goes to rate 47 this "summer"), this would drive higher operating leverage for ATRO. Moreover, C26's margin guide includes a $20MM (+$12MM Y/Y) drag from tariffs, which may prove too high given the SCOTUS ruling. Pricing also may be a lever, as ATRO has another 20-30% of pricing actions left to work through & has so far managed to get price step-ups of 60% on contract renewals. (2) Orders To Track - ATRO expects a contract to true-up non-recurring engineering work on the MV-75 program & and possible NATO orders for military radio test sets, perhaps in H1. (3) Other - Q4's strong EBITDA margin of 19.0% was driven by favorable mix, which included a spares surge that also will lift Q1's margin. ATRO's Q1 will be the C26 low point for sales ($220-230MM guide). Q2-Q4 sales should be ~$245MM, ~$250MM, & ~$250MM, respectively."

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