Investment Insight: Acquiring Shares of Hexcel Could Pave the Way for Future Wealth Accumulation
In the ever-evolving world of commercial aviation, Hexcel, a leading supplier of advanced composite materials, finds itself at the forefront of a promising recovery. The company's stock prospects appear favourable, thanks to the improving commercial aerospace market and the rising demand for advanced composite materials in new aircraft [1][2].
Boeing, one of Hexcel's major clients, is planning to apply to the FAA to remove a 38 per month production cap for the 737MAX, signalling a potential increase in demand for Hexcel's composite materials [1]. Boeing aims to deliver 52 737MAX aircraft per month, a significant jump from the current production rate [1]. RTX's CEO Chris Calio notes stability in the rates at Boeing, with continued growth in production [1].
Airbus, another significant client, aims to deliver 75 A320neo aircraft per month in 2027, currently delivering at a rate of nearly 39 per month [1]. The company also plans to deliver 14 A220 aircraft per month in 2026, currently delivering at a rate of nearly 7 per month [1]. Airbus also aims to deliver 12 A350 aircraft per month in 2028, currently delivering at a rate of just over 3 per month [1]. However, Airbus has already lowered its expectations for 2025, notably for the composite-rich A350 widebody [1].
Hexcel benefits from multiyear backlogs at major aircraft manufacturers like Airbus and Boeing, which underpin sustained demand for Hexcel’s composite products [1]. The aerospace sector’s gradual recovery is expected to boost production rates as supply chain constraints ease, supporting Hexcel’s sales growth over time [1]. Specifically, Hexcel's materials are crucial in composite-rich programs such as the Airbus A350 [1][2].
Despite the promising outlook, recent reports show mixed short-term results for Hexcel, including revenue dips in the commercial aerospace segment and pressure from production shortfalls at key customers [3]. Cost rationalization measures like the closure of a Belgian facility are aimed at improving long-term profitability [3]. Analysts maintain a cautious "Hold" rating with moderate upside price targets (around $64–$67), reflecting optimism tempered by near-term risks [3][5].
The broader composite materials market outlook supports Hexcel's growth, driven by technological innovation and expanding composite usage in new aircraft and advanced air mobility platforms [4]. The ongoing shift toward lightweight, fuel-efficient materials positions Hexcel well in the evolving aerospace supply chain.
For investors with a long-term horizon, Hexcel's stock recovery is underpinned by fundamental industry trends and its position as a key composite supplier, despite near-term demand fluctuations and margin challenges caused by recent production shortfalls from major clients [1][2][3]. Patience is advised, as the company’s growth is closely linked to the recovery and expansion of commercial aerospace manufacturing.
[1] Bloomberg
[2] Aircraft Magazine
[3] Yahoo Finance
[4] CompositesWorld
[5] Seeking Alpha
Hexcel's position as a key composite supplier in the aerospace industry, particularly to major clients like Boeing and Airbus, is strengthened by the gradual recovery of the sector and the increasing demand for advanced composite materials in new aircraft. The applying of a production cap lift for the 737MAX by Boeing and Airbus' plans to boost delivery rates of several aircraft models signify a potential increase in demand for Hexcel's materials. However, recent reports show mixed short-term results for Hexcel, including revenue dips and production shortfalls at key customers. For investors with a long-term horizon, the stability in the rates at Boeing, the expansion of composite usage in new aircraft, and the company's multiyear backlogs at major aircraft manufacturers provide a promising outlook for Hexcel's stock recovery.
