Is HRX stock a buy?

Its fourth quarter results are in the books and National Bank Financial analyst Cameron Doerksen still likes what he sees from Heroux-Devtek (Heroux-Devtek Stock Quote, Chart, News, Analysts, Financials TSX:HRX).

On May 22, HRX reported its Q4, 2024 results. The company posted Adjusted EBITDA of $33.1-million on revenue of $184.1-million.

“I am proud to announce a very strong quarter of sales and profitability. These results were driven by the many measures put in place over the last two years to improve productivity through automation, the stabilization of our production systems and pricing initiatives. I am confident that this marks the beginning of a sustainable trend of improving performance propelled by our great teams who are now better equipped to manage the persistent supply chain issues,” CEO Martin Brassard said. “As we look ahead, the current macroeconomic environment is favourable for Heroux-Devtek, especially in the defence sector. The demand from prime contractors around the world for our products has never been higher, which demonstrates the trust and recognition our clients place in the quality, safety and excellence of our products.”

The analyst thinks this quarter is a harbinger of things to come.

“With demand in both the Defence and Civil segments to remain strong over a multi-year period, HRX’s positioning on growing platforms, and the positive impact from the ongoing re-pricing of contracts, we see a sustained multi-year run of revenue growth and margin expansion ahead for the company,” he wrote. “Even with the strong share price performance in recent days, on our updated F2025 forecast, HRX shares are trading at 8.7 times EV/EBITDA versus the aerospace supplier peer group at 15 times current year EV/EBITDA.”

As reported in the Globe and Mail, Doerksen May 23 maintained his “Outperform” rating on HRX while raising his price target on the stock from $26.00 to $29.00.

“Assuming Boeing can ultimately overcome its production issues and engine suppliers can also increase deliveries, based on publicly stated production goals, combined Airbus and Boeing aircraft deliveries will be 45 per cent higher in in calendar 2026 versus actual 2023 deliveries,” the analyst wrote. “HRX should therefore see solid growth tailwinds on multiple civil aircraft programs (including business jet programs) for a multi-year period that could be supplemented by new contract wins. On the defence side of the business, HRX will benefit from growth in several existing programs (F-18E/F landing gear overhaul, Sikorsky CH-53K helicopter, MQ-25 unmanned aircraft) in the coming years. Management notes that it is seeing numerous potential new contract opportunities, especially for defence programs. These include new contracts that could support growth in the next two years as well as longer-term aircraft programs.”