TDG - Why Shares of TransDigm Group Are Up Today
Shares of aerospace component supplier TransDigm Group (NYSE: TDG) gained more than 14% on Wednesday, despite a number of negative headlines coming out of the industry. The company's stock is down more than 40% year to date even after the gains and are almost certainly oversold in all but the worst-case scenario. Investors on Wednesday were more focused on the broader macro optimism than they were on any industry-specific news.
TransDigm and other commercial aerospace suppliers have been hit hard by troubles experienced by the airlines due to the COVID-19 pandemic. Travel demand dried up overnight as the virus spread, causing airlines to ground significant portions of their fleets and defer new plane orders.
That's led to fewer component sales and less demand for spare parts. On Wednesday alone Airbus said it was cutting new plane production rates by one-third or more, and supplier Spirit AeroSystems announced a series of cuts to match a production slowdown instituted by Boeing.