BMO Capital on Friday lowered its 12-month price target for Hexcel Corp. (NYSE:HXL) to $85.00 from $88.00, while retaining a Market Perform rating on the aerospace materials supplier. The stock was trading around $84.56 at the time of the update, close to its 52-week high of $88.00 and following a 39.34% advance over the preceding six months.
The modest downward revision follows Hexcel's fourth-quarter results, which BMO characterized as a "solid" earnings beat. The company reported an adjusted earnings per share of $0.52, topping the consensus forecast of $0.49. Revenue for the quarter came in at $491 million, ahead of the $480.16 million analysts had expected. Hexcel also provided guidance implying 25% earnings-per-share growth at the midpoint for 2026.
BMO noted that the company's guidance was at the high end of Street expectations, and observed that market participants appeared to move past the guidance in driving the stock higher after the report. Despite acknowledging that Hexcel possesses "some of the best growth characteristics" within its sector, the research team said the shares now carry "one of the most lofty valuations." As a result, BMO described itself as "waiting on the sidelines for an entry point," a stance that underpins the modest reduction to its price target.
In a separate analyst action, Morgan Stanley upgraded Hexcel from Underweight to Equalweight and materially increased its price target to $90.00 from $67.00. Morgan Stanley pointed to improving operating margins and rising commercial original equipment manufacturer production rates as the rationale for its more favorable view, stating these dynamics suggest sustained positive operating leverage for the company.
Key context and takeaways
- Hexcel beat consensus estimates in the fourth quarter with EPS of $0.52 versus $0.49 expected and revenue of $491 million versus $480.16 million projected.
- BMO cut its price target to $85 from $88 and maintained Market Perform, citing valuation concerns despite strong results and 2026 EPS guidance implying 25% growth at the midpoint.
- Morgan Stanley upgraded the shares to Equalweight and raised its target to $90 from $67, highlighting margin improvement and higher commercial OEM production rates as drivers of positive operating leverage.
Sectors affected - Aerospace materials and industrial suppliers tied to commercial OEM production rates and operating-margin trajectories are the primary areas influenced by these analyst moves.
Risks and uncertainties
- Valuation risk - Analysts at BMO flagged that Hexcel's shares trade at a relatively high valuation, which affects the timing of potential new investments in the stock.
- Market reaction risk - Despite high-end guidance, investor behavior pushed the stock higher, indicating potential sensitivity to sentiment around quarterly results.
- Execution dependence - Morgan Stanley's upgrade rests on improving operating margins and stronger OEM production rates; if those operational improvements do not persist, the expected positive operating leverage may be impaired.
These analyst actions and the underlying corporate results will be monitored by market participants focused on aerospace supply chains, production-rate trends at OEMs, and valuation multiples within the industrials sector.