TXT: Fair View Will Balance Higher Long-Term Prospects And Near-Term Aviation Headwinds

Analysts have raised their fair value estimate for Textron from $73.00 to $86.00 per share, citing slightly higher long term revenue growth assumptions and a richer future earnings multiple, even as near term aviation estimates have been reduced following recent results.

Analyst Commentary

Recent Street research reflects a more cautious stance on Textron, with at least one major firm trimming its price target and reinforcing a Neutral view after the latest earnings update. While the long term fair value estimate has moved higher, shorter term expectations for the aviation segment have been recalibrated to reflect softer near term demand and execution uncertainty.

JPMorgan lowered its price target on Textron to $88 from $90 and reiterated a Neutral rating, noting that the earnings release warranted reduced aviation estimates. This move underscores a view that, although the company retains solid strategic positioning, the current share price already discounts much of the medium term improvement in margins and cash flow.

Bearish Takeaways

• Bearish analysts highlight that downward revisions to aviation forecasts, even if modest, signal continued volatility in end market demand and raise questions about the durability of recent margin gains.
• The cut in price targets relative to prior expectations is framed as evidence that valuation is less compelling, with limited upside if execution slips or macro conditions weaken further.
• Cautious sentiment centers on the risk that higher long term growth assumptions may prove optimistic if backlog conversion slows or new program wins come in below expectations.
• Some bearish analysts argue that a Neutral stance remains appropriate given execution risks in aviation and the possibility that competitive pressures could cap upside to both earnings and the multiple investors are willing to pay.

What's in the News

• The board appoints Bell segment chief Lisa Atherton as Textron's next CEO, effective January 4, 2026. Current CEO Scott C. Donnelly will transition to Executive Chairman on the same date (company announcement).
• The board amends its bylaws to formally create the role of Executive Chairman, separating it from the CEO position and defining distinct powers and responsibilities for the new role (company filing).
• Textron approves a reorganization that eliminates Textron eAviation as a standalone reporting segment and folds most activities into Textron Aviation and Textron Systems, effective with fiscal 2026 reporting (company filing).
• The company reiterates its full-year 2025 earnings guidance, maintaining its outlook for income from continuing operations of $955 million to $990 million and diluted EPS of $5.19 to $5.39 (guidance update).
• Textron completes a major share repurchase tranche, buying back an additional 2.58 million shares in the latest period and finishing a program totaling 27.77 million shares, or 14.73 percent of shares outstanding, for $2.26 billion (buyback update).

Valuation Changes

• Fair Value Estimate has increased notably, rising from $73.00 to $86.00 per share and implying a higher long term intrinsic value assessment.
• Discount Rate has risen slightly, moving from 7.63 percent to approximately 8.09 percent and reflecting a modestly higher required return or perceived risk profile.
• Revenue Growth assumptions have increased significantly, from about 1.87 percent to roughly 3.53 percent and indicating a more optimistic outlook for long term top line expansion.
• Net Profit Margin expectations have edged down slightly, from approximately 7.56 percent to about 7.38 percent and suggesting somewhat more conservative profitability assumptions.
• Future P/E has moved higher, increasing from around 13.2x to about 14.7x and pointing to a richer forward earnings multiple in the valuation model.