Hexcel (HXL) Stock Forecast & Price Target

Hexcel is poised for growth as it anticipates a substantial increase in warbird revenues, projected to rise nearly 50% between 2026 and 2028, driven by improved investor confidence in the original equipment cycle. The company's Defense, Space & Other sales demonstrated robust performance, with a year-over-year increase of 13.3% to $182 million, surpassing consensus estimates by 11%, indicating strong demand across various sectors. Furthermore, Hexcel reported a 32% year-over-year increase in free cash flow, reaching approximately $96.5 million, and expects earnings and cash flow to grow as the supply chain stabilizes to support higher production rates.

Hexcel's recent financial performance has shown several concerning trends, leading to a negative outlook for its stock. The company's gross margins have declined to 21.9%, reflecting a dip of 140 basis points year-over-year, alongside a significant drop in operating margins to 9.8%, which fell by 180 basis points year-over-year, primarily due to tariffs and reduced inventory levels. Furthermore, the revised 2026 outlook indicates modest revenue growth projections of approximately 8% at the midpoint, hindered by flat to slightly declining revenues in the defense and aerospace segments, coupled with adverse impacts from ongoing destocking and higher interest expenses.