TransDigm Earnings: Acquisitions, Defense Opportunity Ups Forecast; Fair Value Estimate Up to $1100

TransDigm's fiscal third-quarter 2024 results came in very close to our forecast, but we have updated our full fiscal 2024 estimates to reflect management's upwardly revised guidance as its recently acquired companies contribute results at the wide-moat manufacturer of specialty aircraft parts. We increased our longer-term expectations for growth and profitability in the company's defense segment, averaging 6% sales growth, with EBITDA margins slowly expanding by 2 percentage points, versus 3% growth and flat margins in our prior forecast. As a result, we've raised our fair value estimate to $1,100 per share from $1,040, representing 30 times our fiscal 2024 earnings estimate and 18 times our estimate of 2024 adjusted EBITDA.