TransDigm's stock tumbles 9.3% despite beating earnings forecasts
TransDigm Group (TDG) has faced a challenging year in the stock market. Despite beating revenue and earnings estimates in its latest quarter, shares dropped sharply after the report. Analysts remain divided on its future performance, though long-term ratings have improved significantly over the past five years.
TDG's stock fell by 9.3% on February 3 after releasing its Q1 2026 earnings. Although the company topped revenue and earnings-per-share (EPS) forecasts, investors reacted negatively to weaker-than-expected organic revenue growth. This decline came even as analysts predict a slight dip in EPS to $35.64 for the year ending September 2026.
Over the past 52 weeks, TDG shares have risen by just 2%, lagging behind the S&P 500's 13% gain and the XLI ETF's 28.6% increase. The underperformance extends to 2026, where the stock has seen only marginal growth year-to-date.
Analyst sentiment has shifted slightly in recent weeks. While the consensus rating remains a 'Moderate Buy', the number of 'Strong Buy' recommendations dropped from 17 to 14 in the past month. UBS analyst Gavin Parsons kept a 'Buy' rating on February 4 but slightly lowered the price target from $1,804 to $1,800.
Looking back over five years, TDG's analyst ratings have improved markedly. The consensus moved from 'Hold' to 'Buy', with average price targets climbing around 45%, from $550 to $800. This outpaces the aerospace and defence sector's 20% average increase, which faced supply chain disruptions and a slower post-COVID recovery.
Currently, the mean price target for TDG stands at $1,589, suggesting an 18.8% upside from its present level. The highest target, $1,900, implies a potential 41.9% gain. The company's earnings history shows mixed results, beating estimates in three of the last four quarters but missing once.
TDG's stock performance has trailed both the broader market and its industry peers over the past year. While analysts see potential upside, recent volatility and shifting ratings reflect uncertainty. The company's long-term improvement in analyst sentiment contrasts with its short-term struggles in organic growth and market returns.
