Market sentiment is a funny thing. About six months ago, I was making the case for stocks like AerCap (NYSE:AER) and Copa (NYSE:CPA) on the basis of Wall Street significantly overestimating the long-term damage to the airline and aerospace sectors and underestimating how willing people would be to travel again once they were allowed to do so. Now, since the election and the launch of effective COVID-19 vaccines, it seems like I have to shift the other way and point out that while those sectors will recover, it is still going to take time.
Specific to Hexcel (HXL), these shares have moved up about a third since my last update on the company, more or less keeping pace with other suppliers like Howmet (NYSE:HWM) and Woodward (NASDAQ:WWD), while lagging Spirit (NYSE:SPR) and outperforming Airbus (OTCPK:EADSY) and Boeing (NYSE:BA). I do believe that Hexcel's business is bottoming out, and I see no real risk that the business won't survive this downturn. Still, unless there's a stronger/quicker re-acceleration in widebody build-rates than I currently expect, I feel like Hexcel is a little ahead of itself in the mid-$40's.
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