Morgan Stanley analyst Kristine Liwag published a research report raising Heico Corporation's (HEI.US) target price from $305 to $330 while maintaining a "Hold" rating. This upgrade reflects the strong performance of aerospace stocks, with the sector's current valuation multiples reaching historic highs. Morgan Stanley believes the expansion of valuation multiples demonstrates industry resilience and expects the positive development trend to continue.

The analyst noted that Heico achieved record-breaking combined operating profit and net sales in the second quarter of fiscal year 2025, increasing 19% and 15% year-over-year respectively. Cash flow from operating activities surged 45% to $204.7 million.

By business segment: Flight Support Group net sales grew 19% to $767.1 million, while Electronic Technologies Group net sales increased 7% to $342.2 million.

However, notable risks include potential cuts in defense, aerospace, or homeland security spending by U.S. and international customers, which could impact company sales. Additionally, intensified competition from existing competitors and new market entrants may lead to market share erosion. Challenges in product development or manufacturing processes could also drive up costs and delay sales deliveries.

Heico Corporation primarily engages in the development, manufacturing, and sale of aerospace, defense, and electronics-related products and services, with operations spanning the United States and global markets.