UBS adjusted its price target on TransDigm (NYSE:TDG) to $1,800 from $1,804 on Wednesday, while leaving its Buy rating intact. The change is modest in size, and comes as the stock has experienced a short-term pullback, falling 7.8% over the past week. Analyst target data compiled by InvestingPro still indicates upside potential, with a high target listed at $1,900.
In its note, UBS flagged questions around what constitutes TransDigm's normalized growth rate after the company showed a slowdown in aftermarket growth and increased lumpiness across recent quarters. Despite those reservations, the firm highlighted TransDigm's continued margin strength and revenue expansion. The company has reported gross profit margins of 59.69% and revenue growth of 11.68% over the last twelve months.
UBS's assessment assumes that TransDigm can sustain high single-digit growth supported by flight activity, pricing and modest content gains on current generation platforms. Even so, UBS observed that this pace sits below the broader industry average and is particularly distant from the trajectory of engine peers.
On profitability, UBS expects TransDigm to deliver steady high-teens EPS compounding going forward and characterized the firm's margin guidance as conservative. The research house also sees room for consensus estimates to move higher over multiple years, even under an assumption of high single-digit aftermarket growth.
Concerns that TransDigm may struggle to continue a bolt-on acquisition strategy were described by UBS as overdone. The research note points to the company announcing $3 billion in acquisitions over the past few months as evidence of ongoing deal activity. Market metrics cited alongside that view include a market capitalization of $71.49 billion and an InvestingPro financial health score labeled as "GOOD." The stock is trading at a price-to-earnings ratio of 40.57, reflecting investors' valuation of the franchise.
Recent company results have offered support for the more positive outlook. TransDigm reported first-quarter 2026 earnings per share of $8.23, ahead of the $8.09 analysts had forecast. Revenue also topped estimates, at $2.28 billion versus the $2.26 billion expected. The quarter produced EBITDA of $1,197 million with a 52.4% margin, a result that exceeded consensus assumptions.
Broker responses to those results have been mixed. BMO Capital raised its price target to $1,550 and reiterated an Outperform rating, pointing to TransDigm's strong margin profile as a central rationale. In contrast, Baird moved in the opposite direction, downgrading the stock from Outperform to Neutral and lowering its price target to $1,400 from $1,650. Baird's note focused on margin concerns and highlighted that original equipment manufacturer volumes are increasing at twice the rate of aftermarket business.
The combined picture in broker research reflects a balance between durable profitability metrics and questions around the sustainability and composition of growth. UBS's view that high single-digit aftermarket growth can persist sits alongside expectations for high-teens EPS compounding and a view that margin guidance may be conservative. At the same time, differing stances from BMO and Baird illustrate how brokers can interpret the same set of results differently when judging valuation and forward momentum.
Contextual analysis
TransDigm's financial profile is characterized by very strong gross margins and recent top-line growth, yet the company is navigating a period of more variable aftermarket performance. Analysts are parsing whether that variability is transitory or indicative of a new baseline for growth. The firm's ongoing acquisition activity and significant market capitalization are factors that support the argument that it can pursue bolt-on deals despite a high P/E multiple.
Investors and market participants should note that broker views diverge on whether current results and strategic actions justify higher targets or more cautious positioning. That dispersion is reflected in targets ranging from $1,400 to $1,900 among the cited analysts and research services.