HEICO (HEI) Stock Forecast & Price Target

Heico demonstrated strong financial performance with a 21% year-over-year revenue increase, reaching $1,209 million, which included approximately 13% organic growth. The Flight Support Group (FSG) sales were particularly robust, rising 18% year-over-year to $802.7 million, exceeding consensus estimates due to growth in the aerospace aftermarket and successful acquisitions planned for 2024 and 2025. The Electronic Technologies Group (ETG) also saw significant growth, with sales increasing 10% year-over-year to $355.9 million, driven by advancements in electronics, defense, and space products, indicating a solid foundation for future expansion.

Heico's financial outlook appears negative due to a decline in operating margins within its Electronic Technologies Group (ETG), which fell to 22.8%, reflecting increased stock-based compensation and a year-over-year drop of 80 basis points. The company’s projected revenue of approximately $5.1 billion for FY27, coupled with a potential reduction in EBITDA margins to around 25.5%, indicates concerns over future profitability and growth, potentially leading to significant multiple compression. Furthermore, Heico's strategic reluctance to appear excessively profitable to airline customers may limit its pricing power and overall financial performance in a competitive market.