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HEICO Corp Updates 2 Key Risk Factors
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HEICO Corp Updates 2 Key Risk Factors

HEICO Corp. (HEI) provides products and services to segments of the aviation, defense, space, medical, telecommunications, and electronics industries. HEI caters to a number of airlines and overhaul shops, defense and space contractors, and military agencies across the globe.

Driven by the continued recovery in the commercial aerospace industry, the company recently delivered better-than-expected fourth-quarter performance on both revenue and earnings fronts.

Q4 revenue jumped 19.5% over the prior year to $509.4 million, exceeding analysts’ estimates by $8.4 million. Earnings per share increased 38% to $0.62, outperforming estimates by $0.03.

Furthermore, the company has declared a semi-annual cash dividend of $0.09 per share. The dividend is payable on January 20, 2022, to investors on record as of January 6, 2022.

With these developments in mind, let us take a look at the changes in HEICO’s key risk factors that investors should know.

Risk Factors

According to the TipRanks Risk Factors tool, HEICO’s top two risk categories are Production and Ability to Sell, contributing 30% and 20% to the total 20 risks identified, respectively.

Compared to a sector average of 11.8%, HEICO’s Production risk factor is at 30%. In its recent annual report, the company has changed two key risk factors.

Under the Legal & Regulatory risk category, HEICO noted that it is subject to regulations by government agencies across the world. Any failure to comply with these regulations could result in a withdrawal, suspension, or revocation of the company’s authorizations and approvals to carry out operations. Any denial of export licenses could reduce HEICO’s sales to certain countries. Such a scenario could adversely affect HEICO’s business.

Under the Production risk category, HEICO highlighted that its Flight Support Group provides jet engine and aircraft component replacement parts. It also repairs, overhauls, and distributes jet engine and aircraft components. If these aircraft or engines are retired or are grounded for longer durations, then HEICO’s revenues could decline along with the value of any associated inventory.

Wall Street’s Take

On December 17, Truist Financial analyst Michael Ciarmoli reiterated a Hold rating on the stock and increased the price target to $135 from $125.

Consensus on the Street is a Moderate Buy based on 2 Buys and 3 Holds. At the time of writing, the average HEICO Corp price target was $153.80, which implies a potential upside of 8.1%. Shares are up 11.5% so far this year.

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