Nascent Commercial Aftermarket Recovery Benefitted Heico During Fiscal Second Quarter; Raising FVE

Narrow-moat-rated Heico reported substantial improvement during its fiscal second quarter as the commercial aviation recovery began taking root with leisure travel in the U.S. and Asia this quarter. Despite top line and operating income improvement, Heico posted sequentially flat net earnings of $0.51 per share, due to abnormally low taxes in the prior quarter resulting from stock option exercises. We are increasing our fair value estimate for the firm to $91 per share from $90, but we still see the stock as substantially overvalued.