04. HEICO Corporation (NYSE:HEI-A)
Upside Potential as of June 23: 26%
HEICO Corporation (NYSE:HEI-A) continues to prove why it's a favorite among aerospace and defense investors, and Wall Street sees room for more gains. With a target price of $314.33, the stock offers a 26% upside from its June 22 closing price of $248.80. This potential is backed by record earnings, robust organic growth, and a strong strategic position across defense, aviation and space markets.
HEICO Corporation (NYSE:HEI-A) operates through two primary segments: the Flight Support Group (FSG) and the Electronic Technologies Group (ETG). FSG focuses on manufacturing and overhauling jet engine and aircraft parts, while ETG delivers high tech electronic, electro optical, and microwave products. Both divisions are benefiting from strong end market demand and well executed acquisitions.
For Q2 FY2025, HEICO Corporation (NYSE:HEI-A) reported impressive 15% year over year revenue growth and a 19% jump in operating income, driven by strong performance across both core segments. The FSG in particular posted record net sales of $767.1 million, a 19% increase, with 14% organic growth, led by surging demand for aftermarket parts and aerospace repair services. FSG operating income climbed 24% to $185 million, pushing the segment’s operating margin up to 24.1%, with an even higher cash margin (EBITA) of 27% when excluding amortization.
The ETG also contributed solid results, with sales rising 7% year over year to $342.2 million, buoyed by growing demand for its aerospace and space products.
Bottom line results were equally strong: net income rose 27% to $156.8 million, or $1.12 per diluted share, and EBITDA jumped 18% to $297.7 million. HEICO Corporation (NYSE:HEI-A) also improved its net debt to EBITDA ratio to 1.86x, signaling strong financial health and room for further acquisitions.
Speaking of which, HEICO Corporation (NYSE:HEI-A) has already completed four acquisitions in FY2025, including Rosen Aviation, a maker of in flight entertainment systems. This move aligns perfectly with HEICO’s strategy of acquiring niche, high margin businesses that enhance long term earnings.
With its diversified revenue base, expanding margins, and a proven M&A playbook, HEICO Corporation (NYSE:HEI-A) is ideally located for continued success. The company’s consistent execution and strategic focus make it a top aerospace and defense stock to watch in 2025.