Key insights
- Guggenheim initiated coverage on Woodward Inc. (WWD) with a buy rating and a $404 price target, citing exposure to secular growth trends in commercial aerospace, defense, and data center power generation. The firm highlighted potential double-digit growth in commercial aerospace, benefits from increased missile spending, and strong growth in power generation for data centers. Guggenheim also sees potential for margin expansion in the industrial segment. The initiation comes after Woodward reported Q3 2026 results that surpassed earnings expectations.
Investing.com - Guggenheim initiated coverage on Woodward Inc. (NASDAQ:WWD) with a buy rating and set a price target of $404, representing 20% upside potential from current levels.
Analyst Michael Ciarmoli said the company offers exposure to multiple secular growth trends including commercial aerospace, defense, missiles, and data center power generation. The company trades at a P/E ratio of 36.12, though its PEG ratio of 0.82 suggests attractive value relative to growth prospects. According to InvestingPro analysis, the stock currently appears overvalued compared to its Fair Value estimate, placing it among considerations on the Most Overvalued stocks list. InvestingPro offers 14 additional exclusive tips for WWD subscribers. The firm expects Woodward’s commercial aerospace revenues to sustain double-digit growth driven by elevated production rates with potential upside in fiscal year 2028 from the A350 aircraft.
Guggenheim said increased missile and readiness spending should benefit defense segment revenues. The firm also expects strong growth in power generation to support the data center ecosystem, which should benefit the industrial segment.
The research firm sees a path for several hundred basis points of incremental margin expansion in the industrial segment. The aerospace segment may see limited expansion in the near-term due to mix and investment, according to the analyst.
Guggenheim said the company offers a compelling mix and near optimal balance of growth opportunities across its business segments. The firm’s analysis embeds aerospace aftermarket growth deceleration in its projections.
In other recent news, Woodward reported its third-quarter fiscal 2026 results, surpassing analysts’ expectations with adjusted earnings of $2.52 per share, compared to the anticipated $2.42. The company’s revenue was $1.1 billion, aligning with forecasts, and marking a 21% increase from the previous year. Despite these positive earnings and revenue results, investor reactions were mixed due to concerns about the company’s future outlook and potential normalization of pricing gains. The company’s adjusted profit saw a significant rise of 43%, reflecting robust performance in its operations. Although the earnings exceeded expectations, the market’s focus on future prospects influenced trading reactions. Analyst firms have yet to provide updates on any potential changes to Woodward’s stock ratings following these earnings. The developments highlight the importance of both current performance and future projections in investor decision-making.
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