Why Textron's Bizjet Market Could Take Off With Upgrade

Textron Inc. TXT is poised to benefit from an improvement in the Bizjet market as the COVID-19 pandemic subsides, while risks to the company’s two FVL (future vertical lift) programs seem lower after early indications from President Joe Biden's administration, according to Credit Suisse.

The Textron Analyst: Robert Spingarn upgraded the rating for Textron from Neutral to Outperform, while raising the price target from $41 to $72.

The Textron Thesis: Used inventory hitting record lows indicates a better outlook for the Bizjet market, Spingarn said in the upgrade note.

As the broader Bizjet market exits the pandemic, the light and mid-sized jet segments are likely to be the prime beneficiaries, and these are the segments where Textron is focused, he added.

“The recovery in utilization rates could lead to higher aftermarket sales and potentially new orders from fleet operators and corporate buyers,” the analyst wrote.

“Further, we believe the funding and timing of both FVL programs is sufficiently de-risked following the early strategic and budget indications from the Biden Administration, which is planning to emphasize modernization,” Spingarn said.

He estimated the combined value of the FVL programs at $12.67 per share, with FLRAA estimated at $9.44 per share and FARA at $3.23 per share.

TXT Price Action: Shares of Textron had risen by 0.51% to $58.88 at the time of publication Monday.