TransDigm Earnings: Air Travel Rebound Fuels Rapid Restocking of Service Parts

After TransDigm reported third-quarter results and revised its expectations for 2023 upward somewhat, we forecast accelerated revenue and profit growth in the near term and have increased our fair value estimate to $760 per share from $730, primarily reflecting rapid sales of aftermarket parts that drove impressive margin expansion at this wide-moat business. Overall, commercial air travel is rebounding almost to 2019 levels, and with Chinese air travel restarting earlier in 2023, TransDigm has seen more demand than expected for its portfolio of service parts.