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The Zacks Analyst Blog Highlights Leidos, TransDigm, AeroVironment, Rolls Royce and Safran

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For Immediate Release

Chicago, IL – December 21, 2023 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Leidos (LDOS - Free Report) , TransDigm Group (TDG - Free Report) , AeroVironment (AVAV - Free Report) , Rolls Royce (RYCEY - Free Report) and Safran (SAFRY - Free Report) .

Here are highlights from Wednesday’s Analyst Blog:

5 Aerospace Stocks That Crushed the Market in 2023

The year 2023 has been a rewarding one for the Aerospace stocks, with a steady recovery observed in the worldwide air travel demand since the onset of the year. Evidently, major indices like the Dow Jones U.S. Select Aerospace & Defense Index and the S&P Aerospace & Defense Select Industry Index rose 12.9% and 22.7%, respectively, year to date.

With the International Air Transport Association projecting 2023 air passenger revenues to mark an impressive 47% improvement from the previous year’s reported actual, we recommend you to buy prominent stocks from the Zacks Aerospace sector like Leidos (LDOS - Free Report) , TransDigm Group , AeroVironment, Rolls Royce and Safran.

Key Sector Driving Factors

The most influential factor that has driven the growth of Aerospace stocks so far this year is undoubtedly the return of air transportation to almost its pre-pandemic level. In October 2023, the air passenger traffic recorded a solid 31.2% improvement year over year, edging closer to the pre-pandemic figures.

Such notable passenger traffic growth trends must have boosted orders for original equipment manufacturers as well as aftermarket service providers from the Aerospace sector. Evidently, we witnessed major aerospace players like Boeing receive a cohort of orders for its 787 Dreamliner and 737 Max jets from varied customers across the globe.

Another major growth driver for this sector’s players is the impressive funds offered by the U.S. government in the form of incremental defense budget as well as aids offered to the nation’s allies that resulted in generous weapon sales. In particular, Aerospace stocks that operate business in the defense space have been benefiting.

As an instance to this, we may mention the frequent security aids to Ukraine that the Biden administration has pledged over the past several months. With these military aids pledging to supply U.S.-made arms and ammunition to the recipients, automatically prominent defense contractors like RTX and Lockheed Martin enjoy a steady contract flow to deliver their combat-proven weaponries.

Further valuable mergers and acquisitions support Aerospace stocks to diversify their product portfolio as well as improve their economies of scale, thereby bolstering the entire sector’s profitability.

Our Top Picks

Expecting the aforementioned factors to continue steadily in the coming years, we remain optimistic about the Aerospace sector’s sustainability in the near term. Consequently, using our Zacks Stocks Screener, we have picked the following five large-cap Aerospace stocks with a Zacks Rank #2 (Buy) at present. A prudent investor can keep these stocks in their portfolio. You can seethe complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Leidos: The company’s core capabilities include providing solutions in the fields of cybersecurity, data analytics, enterprise IT modernization, operations and logistics, sensors, collection and phenomenology, software development and systems engineering.

On Dec 13, 2023, LDOS won a new prime contract worth $700 million to provide prototype and technology development support to the National Security Agency. Such contract wins tend to boost the company’s revenue generation prospects.

LDOS’ shares have moved north 2.4% year to date. The Zacks Consensus Estimate for the company’s 2023 sales implies an improvement of 5.9% from the 2022 reported figure. The consensus estimate for its 2023 earnings implies an improvement of 6.4% from the 2022 reported figure and has moved north 5.7% over the past 90 days.

TransDigm Group: It is a leading global designer, producer and supplier of highly engineered aerospace components that are used in commercial and military aircraft. In November 2023, TransDigm signed an agreement to acquire the Electron Device Business of Communications & Power Industries, with its revenues coming from highly engineered, proprietary products with substantial aftermarket content. This buyout, once complete, will boost TDG’s footprint in the Aerospace sector.

Its shares have moved north 58.6% year to date. The Zacks Consensus Estimate for its fiscal 2024 sales implies an improvement of 15.2% from the fiscal 2023 reported figure. The consensus estimate for its fiscal 2024 earnings implies an improvement of 25.4% from the fiscal 2023 reported figure and has moved north 5.4% over the past 60 days.

AeroVironment: The company supplies unmanned aircraft systems, tactical missile systems and related services primarily to organizations within the U.S. Department of Defense. It also supplies charging systems and services for electric vehicles, and power cycling and test systems to commercial and government customers. On Dec 12, 2023, AVAV secured an award worth $16 million from the U.S. Navy for the advancement of video analytics and computer vision research to support multi-domain robotics projects.

The company’s shares have moved north 52.3% year to date. The Zacks Consensus Estimate for its 2023 sales implies an improvement of 29.9% from the 2022 reported figure. The consensus estimate for its 2023 earnings implies an improvement of 119% year over year.

Rolls Royce: A provider of power systems and services for use on land, at sea and in the air, RYCEY operates in four global markets — civil aerospace, defense aerospace, marine and energy. On Dec 15, 2023, the company announced that Turkish Airlines will place an order for 100 Trent XWB-84 engines and 40 Rolls-Royce Trent XWB-97 engines. This should boost RYCEY’s revenues in the coming years.

The company’s shares have moved north 251.4% year to date. The Zacks Consensus Estimate for its 2023 sales implies an improvement of 19% from the 2022 reported figure. The consensus estimate for its 2023 earnings implies an improvement of 500% year over year.

Safran: It produces aircraft and rocket engines and propulsion systems. On Dec 6, 2023, Safran signed a framework agreement with the Moroccan government outlining a mutual commitment to support and develop Morocco’s aerospace industry ecosystem. This should strengthen SAFRY’s footprint in the aerospace sector.

The company’s shares have moved north 40.6% year to date. The Zacks Consensus Estimate for its 2023 sales implies an improvement of 37.3% from the 2022 reported figure. The consensus estimate for its 2023 earnings implies an improvement of 100% year over year.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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