HEICO (HEI) Stock Forecast & Price Target

Heico experienced a significant 37% year-over-year increase in sales for fiscal 3Q, reaching $992.2 million, which aligns closely with consensus estimates. The Flight Support Group (FSG) demonstrated exceptional performance, with sales soaring 68% year-over-year to a record $681.6 million, driven largely by a 17% organic growth in aftermarket replacement parts. Additionally, the Electronic Technologies Group (ETG) reported an improvement in margins to 23.5%, reflecting enhanced gross profit despite minor challenges in selling, general, and administrative efficiencies.

Heico's financial outlook faces significant challenges, as evidenced by its recent fiscal 3Q24 performance, which reported a decline in Electronic Technologies Group (ETG) revenues by 1% year-over-year, falling 6% short of consensus estimates. The company's EBITDA margins are projected to decrease to 24.5%, coupled with a modest top-line growth forecast of just 8% through FY26, which raises concerns about potential downside scenarios reflecting a marked compression in valuation multiples. Furthermore, Heico's exposure to commercial Original Equipment (OE) has diminished due to reduced order levels, especially in light of changing forecasts from major customers like Boeing, accentuating the risks associated with its growth trajectory.