Canaccord Genuity Cuts Price Target on Hexcel Corp. (HXL) as 4Q Benefited From Lower Tax Rate
Canaccord Genuity reiterated a Hold rating on Hexcel Corp. (NYSE: HXL), and cut the price target to $48.00 (from $50.00), following the company's 4Q earnings report. Hexcel reported $0.56 in EPS, $0.01 ahead of consensus. The results benefited from a slightly lower tax rate due to the renewal of the R&D tax credit. HXL stock posted a jump of almost 11%, as compared to a 1% increase for the A&D sector, on Friday after the Q4/15 results. We believe the stock was oversold, due largely to concerns about the health of the commercial aerospace cycle, and specific concerns about the planned rate increases at Airbus.
Analyst Ken Herbert commented, "For the Q4/15 Hexcel (HXL) posted $0.56 in EPS, in line with our expectation and one cent ahead of consensus. The results benefited from a slightly lower tax rate due to the renewal of the R&D tax credit. Total organic revenue growth in the quarter was 3.6%, with new commercial aerospace programs up >40%. The Space & Defense revenues were down more than we had expected, and the Industrial sales were down 14.5% in the quarter."
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Shares of Hexcel Corp. closed at $42.68 yesterday.