HXL - Hexcel's Solid Grounds For Double-Digit Earnings Growth Make It A Buy

2024-04-15 06:45:25 ET

Summary

• Shares of Hexcel Corporation plunged in response to a CEO change and a previous downgrade by analysts.
• The market overreacted to the news, as Hexcel has had a strong year and is expected to deliver double-digit earnings growth.
• Hexcel's competitive advantages, margin growth plans, and expected sales growth in the aerospace and defense industries make it an attractive investment opportunity.

Thesis

Shares of Hexcel Corporation ( HXL ) plunged 12.38%, or $8.81 on April 10, 2024. Why? Mainly in response to a downgrade from Bank of America Securities , which pointed to a sudden change at the top.

A company news release announced the day before that Tom Gentile, formerly of Spirit AeroSystems ( SPR ) would take the reins from current CEO Nick Stanage on May 31.

In February, it was reported that Hexcel was downgraded by analysts at Morgan Stanley ( MS ) because of “supply-chain constraints” and because the stock price was not justified by its earnings potential....

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