Hexcel (HXL) Stock Forecast & Price Target

Hexcel is poised for growth, reflecting a strong market presence with significant increases in revenues, particularly in the Defense, Space & Other sectors, which rose 13.3% year-over-year, amounting to $182 million and exceeding consensus estimates. The company anticipates a ~50% increase in WB revenues from 2026 to 2028, supported by heightened investor confidence in the original equipment cycle and stabilization of the supply chain, which is expected to enhance production rates and earnings. Additionally, Hexcel's free cash flow of approximately $96.5 million, marking a 32% year-over-year increase, positions the company favorably for future investments in research, technology, and capital expenditures to leverage opportunities in new aircraft programs.

Hexcel's recent financial performance showcased a decline in gross margins and operating leverage, attributable to tariffs and reduced finished goods inventory, resulting in adjusted operating margins dropping to 9.8%, which represents a year-over-year decrease of 180 basis points. Additionally, the company faces headwinds from ongoing destocking and a revised outlook reflecting only modest revenue growth of approximately 8% by 2026, particularly impacted by flat to slightly declining revenues in its Defense, Space & Other segment. Furthermore, the downward revision in earnings per share guidance, incorporating increased tariff costs and rising interest expenses, indicates a challenging financial landscape for Hexcel moving forward.