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Investors Business Daily
Investors Business Daily

TransDigm Fades From Record Highs; Lowered Guidance Overshadows Earnings Beat

TransDigm stock faded from record highs Thursday. The aerospace and defense components maker cleared estimates for Q1 earnings in the morning, but lowered its 2024 earnings outlook.

TransDigm reported a 56% increase in adjusted earnings to $7.16 per share compared to FactSet expectations of $6.41 per share. Revenue jumped 28% to $1.79 billion while Wall Street anticipated $1.68 billion.

Revenue from the commercial original equipment manufacturer (OEM) segment jumped 25% during the quarter. Commercial aftermarket sales leapt 22%. Defense revenue increased 28% for the quarter.

The defense parts maker lifted its 2024 net sales outlook, predicting a range from $7.58 billion to $7.76 billion. That would represent a 16.4% increase at the midpoint compared to 2023. TransDigm guided 2024 adjusted earnings to between $29.97 and $31.73 per share, up from $25.84 per share in 2023. However, TransDigm lowered its earnings guidance by about $1.12 per share at the midpoint of its prior forecast, reflecting about $130 million in additional interest expenses after issuing $2 billion of debt.

FactSet analysts predict 2024 earnings of $32.36 per share on $7.62 billion in sales.

TransDigm sees commercial OEM revenue increasing around 20% while commercial aftermarket revenue grows in the midteens range. The company forecasts defense revenue growth ranging from the high-single digits to low-double digits.

"Despite higher debt levels, TDG's leverage is still well within its targeted range," KeyBanc wrote in a research note after results. The firm has a 1,180 price target and an overweight rating on TDG stock.

TransDigm Stock

TDG stock shed 1.6% after touching all-time highs Thursday.

That left shares still in a profit-taking zone, more than 20% above its November breakout following fiscal Q4 earnings.

TDG stock rallied nearly 12% so far this year.

You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison

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