Shares of Textron (TXT) are on the rise on Tuesday after Morgan Stanley analyst Kristine Liwag upgraded the stock to Overweight with a Street-high price target of $87. The analyst cited strength in the company's business jet side and highlighted Textron as a "strong contender as market leader" in electric vertical takeoff and landing.
CAPEX CYCLE, URBAN AIR MOBILITY UPSIDE: In a research note to investors on Tuesday, Morgan Stanley analyst Kristine Liwag upgraded Textron to Overweight from Equal Weight with a price target of $87, up from $49. While the market has already started valuing the return of business jets, the "red-hot capex cycle" in the U.S. could provide further share upside, Liwag contended. The analyst was previously cautious regarding a recovery of business jets given "many false positives since the financial crisis." However, Liwag acknowledged that she missed the initial inflection point for Textron Aviation, and now sees the stars aligning for a strong recovery.
Additionally, the analyst believes that Textron is a "strong contender as a market leader" in electric vertical takeoff and landing, with optionality from eVTOLs underestimated at current share levels. The breadth of Textron’s portfolio uniquely positions the company as a strong contender as a market share leader in the eVTOL industry particularly as most of the competitors are new entrants that have never certified an aircraft before, she explained. Further, Textron’s expertise in distributed electric propulsion, tiltrotor, propeller design, automation, and aircraft certification provide the company an "unparalleled advantage" in designing and manufacturing eVTOL aircraft, Liwag added.
WHAT'S NOTABLE: Several companies in the urban air mobility space have recently announced deals to come public via SPAC mergers. Urban helicopter service Blade Urban Air Mobility (BLDE) had first announced that it was merging with KSL Capital's Experience Investment (EXPC) back in December, while two early-stage eVTOL aircraft developers – Archer and Joby Aviation - announced SPAC mergers earlier this year. Archer is planning to merge with Moelis & Co.'s Atlas Crest Investment Corp. (ACIC), while Joby Aviation has agreed to go public with Reid Hoffman and Mark Pincus's Reinvent Technology Partners (RTP). Earlier this month, Zanite Acquisition Corp. (ZNTEU) confirmed that it is in negotiations relating to a potential business combination with Eve Urban Air Mobility Solutions, a subsidiary of Embraer (ERJ).
PRICE ACTION: In Tuesday morning trading, shares of Textron have gained over 3% to $69.36.
Embraer
-0.34 (-2.22%)
Zanite Acquisition
+ (+0.00%)
Zanite Acquisition Corp.
+ (+0.00%)
Reinvent Technology Partners
+0.015 (+0.15%)
Archer Aviation
+
American Coastal
+0.005 (+0.05%)
Experience Investment Corp.
+
Textron
+2.03 (+3.02%)