Morgan Stanley Turns Bullish On Textron: What Investors Need To Know

A Morgan Stanley analyst is bullish on shares of Textron, Inc TXT.

The Textron Analyst: Kristine Liwag upgraded Textron from Equal-weight to Overweight and increased the price target from $49 to $87.

The Textron Takeaways: Textron is in a position to capitalize on the recent growth in the business jet industry, Liwag said in a Tuesday upgrade note.

Business jet take-off and landing numbers are at their highest point in the U.S. since the financial crisis, the analyst said.

Additionally, the Morgan Stanley analyst cited named key data points she said support the argument of future increased demand for business jets. They are: 

• A positive correlation of medium-sized business jets to U.S. non-residential spending
• Fewer city pairs in the U.S. that provide limited mobility in lower population states
• Strong demand from first-time business jet users

Increased and sustained demand for medium-sized business jets in the U.S. will positively affect Textron's pricing power and will boost the company's margins, Liwag said.

The analyst next turned to the eVTOL (electric vehicle take-off and landing) industry, a type of vehicle she said Textron has the core competencies to build — and likely maintain market leadership. This view is supported by the fact that most of the new entrants and competitors to Textron in the eVTOL industry have never certified an aircraft before, Liwag said, and Textron has significant manufacturing expertise, including business jets, helicopters, military drones and electric golf carts. 

Liwag forecast the total addressable eVTOL market to reach $1 billion by 2040 and $9 trillion by 2050. 

TXT Price Action: Textron shares were up 2.68% to $69 at last check Tuesday.