Hexcel initiated with a Buy at UBS

UBS initiated coverage of Hexcel with a Buy rating and $81 price target. Demand for new aircraft is strong with orders over the last 12 months seen at twice the rate of deliveries, while raw material costs for Hexcel are “down meaningfully”, the analyst tells investors in a research note. UBS adds that the company’s growth requires minimal capex and working capital, resulting in a 16% free cash flow margin vs. 5% long-term. The firm also contends that the company is set to return a significant amount of cash to shareholders in the coming years.