TransDigm (TDG) Q3 2025 Earnings Call Transcript
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 4d ago
0mins
Should l Buy TDG?
Source: NASDAQ.COM
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Analyst Views on TDG
Wall Street analysts forecast TDG stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for TDG is 1600 USD with a low forecast of 1400 USD and a high forecast of 1900 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
13 Analyst Rating
10 Buy
3 Hold
0 Sell
Strong Buy
Current: 1285.530
Low
1400
Averages
1600
High
1900
Current: 1285.530
Low
1400
Averages
1600
High
1900
About TDG
TransDigm Group Incorporated, through its wholly owned subsidiaries, is a global designer, producer and supplier of highly engineered aircraft components for use on nearly all commercial and military aircraft in service. Its segments include Power & Control, Airframe and Non-aviation. Its product offerings provided to end-users in the aerospace industry include mechanical/electro-mechanical actuators and controls, ignition systems and engine technology, specialized pumps and valves, power conditioning devices, specialized AC/DC electric motors and generators, batteries and chargers, engineered latching and locking devices, engineered rods, engineered connectors and elastomer sealing solutions, databus and power controls, cockpit security components and systems, specialized and advanced cockpit displays, engineered audio, radio and antenna systems, specialized lavatory components, seat belts and safety restraints, engineered and customized interior surfaces and related components.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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Baird Downgrades TransDigm to Neutral Amid Margin Concerns
- Rating Downgrade: Baird Equity Research downgraded TransDigm Group Inc. (TDG) from Outperform to Neutral, primarily due to a shift in its business mix towards lower-margin OEM volumes, which is expected to cap profit expansion over the next year.
- Price Target Cut: Analyst Peter Arment reduced TDG's price target from $1,650 to $1,400, reflecting expectations that margins have peaked in the near term, even as TDG continues to generate industry-leading profitability.
- Earnings Structure Shift: While aftermarket activity still accounts for over 75% of TDG's EBITDA, growth in that segment has normalized, and OEM revenue is expanding at roughly twice the pace of aftermarket sales, increasing reliance on lower-margin production programs at Boeing and Airbus.
- Leverage Risk: Net leverage is expected to exceed 6 times EBITDA once three pending acquisitions close, limiting TDG's flexibility for additional deal-making in the near term, with Baird noting that the higher leverage profile reduces optionality at a time when margin expansion opportunities appear limited.
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- Strong Earnings Performance: In this week's earnings recap, 20 out of 23 S&P 500 industrial companies exceeded profit estimates, indicating robust profitability across the sector despite ongoing economic uncertainties.
- Eaton's Mixed Results: Eaton reported record earnings in its fourth quarter, but revenue fell slightly short of Wall Street expectations, leading to a 6.2% drop in premarket trading, reflecting the market's keen focus on revenue growth.
- Uber's Investment Pressures: Uber missed fourth-quarter profit expectations primarily due to increased costs from cheaper rides and higher insurance, despite a double-digit rise in bookings, causing shares to decline over 6%, highlighting market concerns about its profitability.
- Pentair's Restructuring Impact: Pentair's significant sales decline in its Water Solutions segment overshadowed a narrow revenue beat, resulting in an 11% plunge in shares due to announced restructuring plans, indicating a lack of market confidence in its future growth prospects.
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Baird Downgrades TransDigm to Neutral Amid Margin Concerns
- Rating Downgrade: Baird Equity Research downgraded TransDigm Group Inc. (TDG) from Outperform to Neutral, primarily due to a shift in its business mix towards lower-margin OEM volumes, which is expected to cap profit expansion over the next year.
- Price Target Cut: Analyst Peter Arment reduced TDG's price target from $1,650 to $1,400, reflecting expectations that margins have peaked in the near term, even as TDG continues to generate industry-leading profitability.
- Earnings Structure Shift: While aftermarket activity still accounts for over 75% of TDG's EBITDA, growth in that segment has normalized, and OEM revenue is expanding at roughly twice the pace of aftermarket sales, increasing reliance on lower-margin production programs at Boeing and Airbus.
- Leverage Risk: Net leverage is expected to exceed 6 times EBITDA once three pending acquisitions close, limiting TDG's flexibility for additional deal-making in the near term, with Baird noting that the higher leverage profile reduces optionality at a time when margin expansion opportunities appear limited.
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