TransDigm Offers Favorable 2023 Outlook as Recovery in Commercial Air Travel Continues

Wide-moat-rated TransDigm posted strong fiscal first-quarter results due to continued strength in commercial air traffic. Revenue of $1.4 billion and adjusted EPS of $4.58 each modestly outpaced FactSet consensus. Management slightly raised its fiscal 2023 outlook for sales and adjusted EBITDA to reflect further sequential improvement in air traffic demand throughout the year, led by international activity. We are encouraged by the rebound in commercial air travel demand and by indications of strong order flow from the defense sector. We are raising our DCF-derived fair value estimate by 2% to $663 per share as we boosted our sales forecast slightly due to the firm's more favorable 2023 outlook.