TransDigm stock faded from record highs Thursday. The aerospace and defense components maker cleared estimates for Q1 earnings in the morning, but lowered its 2024 earnings outlook.
TransDigm reported a 56% increase in adjusted earnings to $7.16 per share compared to FactSet expectations of $6.41 per share. Revenue jumped 28% to $1.79 billion while Wall Street anticipated $1.68 billion.
Revenue from the commercial original equipment manufacturer (OEM) segment jumped 25% during the quarter. Commercial aftermarket sales leapt 22%. Defense revenue increased 28% for the quarter.
The defense parts maker lifted its 2024 net sales outlook, predicting a range from $7.58 billion to $7.76 billion. That would represent a 16.4% increase at the midpoint compared to 2023. TransDigm guided 2024 adjusted earnings to between $29.97 and $31.73 per share, up from $25.84 per share in 2023. However, TransDigm lowered its earnings guidance by about $1.12 per share at the midpoint of its prior forecast, reflecting about $130 million in additional interest expenses after issuing $2 billion of debt.
FactSet analysts predict 2024 earnings of $32.36 per share on $7.62 billion in sales.
TransDigm sees commercial OEM revenue increasing around 20% while commercial aftermarket revenue grows in the midteens range. The company forecasts defense revenue growth ranging from the high-single digits to low-double digits.
"Despite higher debt levels, TDG's leverage is still well within its targeted range," KeyBanc wrote in a research note after results. The firm has a 1,180 price target and an overweight rating on TDG stock.
TransDigm Stock
TDG stock shed 1.6% after touching all-time highs Thursday.
That left shares still in a profit-taking zone, more than 20% above its November breakout following fiscal Q4 earnings.
TDG stock rallied nearly 12% so far this year.
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