Guggenheim Starts HEICO (HEI) at Neutral
Guggenheim analyst Michael Ciarmoli initiates coverage on HEICO (NYSE: HEI) with a Neutral rating.
The analyst comments "We are initiating coverage of Heico Corporation (HEI) with a Neutral rating. HEI operates a highly differentiated best-of-breed operating model that has long since been the envy of the commercial aerospace sector and consequently has almost always garnered a premium valuation versus its peers — in some cases a 200% premium. FSG margin expansion in the post COVID world has been outstanding, surpassing the expectations of many, but on a go forward basis we believe the potential for weakening or even normalizing global aviation metrics have the potential to place a lid on future FSG margin expansion. On the other side of the house, the company’s defense-exposed operations are benefiting from favorable global spending trends but we are still not quite sure if ETG margins generated over the past two quarters can be sustained on a go forward basis. Shares are flat YTD (vs. S&P500 +11%) and the stock is currently trading at a 186% premium to its aftermarket peers and essentially in line with its historical premium. Against a backdrop of a potential slowdown in the global aviation market and perhaps sluggish margins, we believe multiple expansion and upside to estimates in the near term could be limited."
For an analyst ratings summary and ratings history on HEICO click here. For more ratings news on HEICO click here.
Shares of HEICO closed at $316.00 yesterday.