Morgan Stanley adjusted its investment view on Hexcel Corp. (NYSE: HXL), upgrading the stock from Underweight to Equalweight and increasing its target price to $90.00 from $67.00 after the company released fourth-quarter 2025 results. At the time of the note the shares were trading at $84.56, nearing a 52-week high of $88, following a 39.3% gain over the prior six months, according to InvestingPro data.
The bank pointed to improving operating margins as a key rationale, asserting margins appear to have passed their trough. That improvement is attributed to accelerating commercial original equipment manufacturer - OEM - production rates, which Morgan Stanley said should continue to support positive operating leverage as volumes expand.
Alongside the margin thesis, InvestingPro metrics cited in the note show Hexcel operates with a moderate debt position and solid near-term liquidity. The company’s current ratio stood at 2.26, indicating that reported liquid assets exceed short-term liabilities by a comfortable margin.
On forward earnings, Morgan Stanley projected a 27% compound annual growth rate - CAGR - in earnings per share from 2025 through 2028 for Hexcel. That projected pace of EPS growth is materially higher than the peer group average referenced in the bank’s analysis, which is roughly 13% over the same period.
However, InvestingPro valuation data referenced in the coverage note shows Hexcel trading at a trailing price-to-earnings ratio of 58.56, well above the stock’s calculated Fair Value and indicating the shares sit at a premium relative to that benchmark. That valuation gap was highlighted as a counterbalance to the stronger growth outlook.
Morgan Stanley’s choice to raise the rating only to Equalweight rather than to Overweight reflects the firm’s preference for companies with balanced exposure across commercial OEM and aftermarket businesses. In the bank’s view, that mix provides greater resilience to potential interruptions in production.
The revised $90 price target incorporates roughly a 2% increase to Morgan Stanley’s 2027 EPS forecast and reflects a willingness to assign a higher 2027 P/E multiple - about 29x versus the prior 22x - supported by the firm’s view of stronger relative growth and improved visibility into the commercial OEM production ramp.
Hexcel’s own fourth-quarter 2025 results provided supporting evidence for the upgrade. The company reported earnings per share of $0.52, beating the analyst consensus of $0.49, while revenue came in at $491 million versus an expected $480.16 million. The earnings release was followed by a notable uptick in after-hours trading, reflecting investor reaction to the stronger-than-forecast financial results. The precise intraday stock movement is not detailed here; the financial outcomes remain the primary focal point.
No other major corporate developments - such as mergers or additional analyst changes - were reported in conjunction with these updates.
Summary of key inputs from the coverage and results:
- Rating change: Underweight to Equalweight; price target increased to $90.00 from $67.00.
- Operational drivers: Margins appear to have bottomed; increasing commercial OEM production expected to sustain operating leverage.
- Financials: Q4 2025 EPS $0.52 versus $0.49 expected; revenue $491 million versus $480.16 million expected; current ratio 2.26 indicates strong near-term liquidity.
- Valuation: Trailing P/E about 58.56 and trading above calculated Fair Value; Morgan Stanley applies a higher 2027 P/E of about 29x in its updated target.