HEICO (HEI) Stock Forecast & Price Target

Heico has demonstrated strong financial growth, reporting a 21% year-over-year increase in revenue, reaching $1,209 million, with approximately 13% of this growth being organic. The company's Flight Support Group (FSG) sales rose 18% year-over-year to $802.7 million, driven by robust demand in the aerospace aftermarket and strategic acquisitions, exceeding consensus estimates. Additionally, Heico's Electronic Technologies Group (ETG) saw a 10% increase in sales to $355.9 million, indicating sustained growth across its defense and electronics segments, underpinning a positive outlook for the company.

Heico's stock outlook is negatively impacted by declining operating margins in its Electronic Technologies Group (ETG), which fell 80 basis points year-over-year to 22.8%, exacerbated by increased stock-based compensation. Furthermore, projections indicate a potential revenue decline to approximately $5.1 billion in FY27, accompanied by a decrease in EBITDA margins to around 25.5%, which raises concerns about significant multiple compression. Additionally, Heico's cautious approach to profit generation from airline customers may hinder its growth potential, affecting investor sentiment.