Esterline Technologies: Canaccord Upgrades Shares, Sees 17% Upside

In a report published today, Canaccord analyst Kenneth Herbert upgraded shares of Esterline Technologies Corp. (ESL) from Hold to Buy and raised the price target from $112.00 to $138.00.

Herbert explains why he raised his rating on shares of Esterline Technologies: “At its recent investor day, ESL provided a 3- to 5-year goal of 16% EBIT margins, 5% organic top-line growth, and 15% ROIC. We believe the margin target represents the initial step in a structural margin improvement under new management. The company also provided additional details on its strategic sourcing, global footprint rationalization, and enterprise improvement plans, which should represent significant upside and are not yet reflected in the long-term guidance. We are increasing our above-guidance FY2014 EPS estimate to $5.78 and our FY2015 EPS estimate to $6.81, and initiating a FY2016 EPS estimate of $8.00. The company also announced a $200M buyback authorization.

Granted, ESL stock has been outperforming the sector, up 15% YTD, but we believe as the new targets are better understood, the stock has substantial upside”.

According to TipRanks, which measures analysts and bloggers success rate based on how their calls perform, analyst Kenneth Herbert currently has a one-year average return of 19.6% and a 75% success rate. He is ranked #302 out of 3118 analysts.

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