TAT Technologies (TATT) Stock Forecast & Price Target

TAT Technologies Ltd. demonstrated a strong financial performance in 1Q25, with new order flow increasing by 11% to $52 million, resulting in a record backlog of $439 million, reflecting robust demand across its service offerings. The company's margin profile is improving as volume utilization rises from prior capacity investments, and the ramp-up of additional Auxiliary Power Unit (APU) deals is expected to bring further upside potential. Notably, TAT's revenue growth in Q3 was significantly driven by a 39% year-over-year increase in APU sales and a remarkable 114% growth in landing gear revenue, signaling the onset of a promising MRO cycle in aviation services.

TAT Technologies Ltd's financial performance reveals a modest increase in Heat Exchanger revenues of only 6%, while Trading/Leasing revenues experienced a significant decline of 25%, indicating potential issues in demand and market stability. The company's backlog of Long-Term Agreements decreased slightly to $520 million, although it remains up 21% year-to-date, suggesting challenges in converting backlog into current revenue. Furthermore, key downside risks include macroeconomic factors that could reduce global air traffic and existing issues within the commercial aerospace MRO market, such as short lead times and unpredictable cyclicity, both of which contribute to a negative outlook on the company's stock.