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Textron (TXT) Unveils Completion of the Pipistrel Acquisition

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Textron Inc. (TXT - Free Report) recently unveiled that its acquisition of Pipistrel, a global leader in electrically powered aircraft, reached completion. Through this acquisition, the company aims to solidify its position in the next-generation electric aircraft market.

Pipistrel will continue to operate as a distinct aviation brand within Textron’s latest business segment – Textron eAviation.

Benefits of the Transaction

Textron, which already enjoys a dominant position in the aerospace industry with its well-established brands like Cessna, Beechcraft and Bell, now will be able to strategically grow its business in the electric aircraft market through Pipistrel. The acquisition is also in sync with TXT’s long-term goal to offer a family of sustainable aircraft for urban air mobility, general aviation, cargo and special mission roles.

With this buyout, Textron can also reap the benefits of Pipistrel’s full type-certification from the European Union Aviation Safety Agency (EASA), which will aid in attaining aircraft orders and in delivering the same. Pipistrel is the sole electric aircraft to receive full type-certification from EASA.

Therefore, Pipistrel is likely to be instrumental to Textron’s long-term goal of strengthening its position in the electric aircraft market as nations strive to reduce the carbon footprint and also foresee electric aircraft as the easiest mode of commuting amid the rising congestion in ground traffic.

Textron’s Growth Prospects in Electric Aircraft

The electric aircraft market is continuously evolving to stimulate the urban air mobility conception globally. Also, the reduced fuel cost offered by electric aircraft and the eco-friendly feature, which make these an ideal choice amid the rising efforts to electrify the transportation system, are further propelling demand for electric aircraft.

In this context, it is imperative to mention that the global electric aircraft market is likely to witness a CAGR of 14.8% through 2030, per the report from Markets and Markets. Considering the growth prospects of the electric aircraft market, the recent transaction by Textron is a prudent one and should act as a significant growth catalyst for this stock.

Also, TXT is evaluating other plans to establish its position in the global electric aircraft market. Textron’s business segment, Bell, is working on the plans to launch an electric vertical take-off and landing, Bell Nexus. Bell Nexus 4EX is a four-duct vehicle, which is configurable on an electric or hybrid-electric platform. Such efforts by the company are likely to bolster its revenue generation prospects.

Peer Moves

Aerospace majors that have tapped the emerging electric aircraft market to capitalize on the expanding market size are Airbus (EADSY - Free Report) , Boeing (BA - Free Report) and Embraer S.A.(ERJ - Free Report) .

Airbus has made pivotal progress in the electrification of its fleet. Its electric aircraft product portfolio consists of EcoPulse, CityAirbus, Vahana, E-Fan X, E-Fan 1.0 and E-Fan 1.1.

Airbus boasts a long-term earnings growth rate of 12.4%. The Zacks Consensus Estimate for EADSY’s 2022 sales indicates an improvement of 9.7% from the prior-year reported figure.

Boeing invested $450 million in the aviation start-up, Wisk, to support the development of the air taxi and associated support infrastructure to safely shape the future of mobility.

Boeing’s long-term earnings growth rate is pegged at 4%. The Zacks Consensus Estimate for BA’s 2022 earnings suggests a growth rate of a solid 136.1% from the prior-year reported figure.

Embraer’s subsidiary, EVE, is committed to accelerating the Urban Air Mobility (UAM) ecosystem. EVE is taking a holistic approach to progress the UAM ecosystem with an advanced eVTOL project.

Embraer boasts a long-term earnings growth rate of 17%. Shares of ERJhave appreciated 7.2% in the past year.

Price Movement

In the past year, Textron’s shares have rallied 15.9% compared with the industry’s growth of 9.6%.

Zacks Investment Research
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Zacks Rank

Textron currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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