Hexcel Drops 8% As Covid-19 Headwinds Trigger 3Q Loss

Shares of Hexcel Corp. plunged 7.8% in Monday’s extended trading session after the industrial material company reported dismal 3Q results. The company’s top and bottom line missed analysts’ expectations mainly due to a significant reduction in demand for its products amid the COVID-19 pandemic. (See HXL stock analysis on TipRanks).

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Hexcel’s (HXL) 3Q revenues dropped 49.9% to $286.9 million year-on-year and below the Street consensus of $361 million. The aerospace manufacturer reported an adjusted loss per share of $0.29 for the quarter, compared with the year-ago quarter’s adjusted EPS of $0.90. Analysts had expected EPS of $0.08.

Hexcel reported a decline in revenues across all its market segments. Sales across its Commercial Aerospace, Industrial, and Space & Defense divisions fell 66.6%, 35.8% and 0.9%, respectively. The company noted that Boeing (BA) 737 MAX sales remain at a “very low level” adding that further production reductions announced at the end of July 2020 by Airbus and Boeing are leading to supply chain destocking.

Following the results, Cowen & Co. analyst Gautam Khanna reiterated his Hold rating and the price target of $34 (6.5% downside potential). In a note to investors, Khanna wrote, “Severe commercial aerospace OE (original equipment) destocking drove a big Q3 sales/EPS miss. We expect HXL’s stock to de-rate and Street C21-22E (Calendar 2021-2022 Estimate) to drop as investors re-baseline OE build rate expectations.”

Currently, the Street is also sidelined on the stock. The Hold analyst consensus is based on 8 Holds, 1 Buy, and 3 Sells. With shares down 50.4% year-to-date, the average price target of $37.33 implies a moderate upside potential of 2.7% to current levels.