The company’s shares are currently testing the 50-day exponential moving average (EMA50, orange line) on the daily timeframe. A decline below this level could potentially open the way for a test of the EMA200 near 282 USD per share. Conversely, a breakout above would suggest a renewed test of the upper boundary of the price channel around 328 USD.
Heico (HEI.US) shares have been among the biggest winners of the past several months, performing strongly and leading gains in the U.S. industrial sector alongside names such as Curtiss Wright and RTX Corp. On the other hand, the stock has slipped nearly 10% from its all-time high, while the euphoric reaction to recent earnings was quickly met with selling pressure. It is clear that U.S. companies with secure, short supply chains, providing components and services not only to private businesses but also to the Pentagon and the space sector, should perform at least solidly in the coming quarters. So why did Heico shares fall?
Heico is dominating the aerospace niche markets
- Heico is one of the leaders in this field. The company provides aircraft servicing, critical spare parts, and top-quality OEM replacements, allowing businesses and institutions to save on critical components ranging from electronics to structural elements. In recent months, speculation has persisted around potential increases in Pentagon orders, given that the Department of Defense often “overpays” OEM suppliers, making Heico a natural alternative.
- In Q3 2025, the company reported $1.15 billion in sales and $177.34 million in net profit, reflecting year-over-year growth of nearly 20% and 30%, respectively. For decades, Heico has pursued an aggressive acquisition strategy, absorbing niche, strategic businesses to build long-term market strength. This has made the company an almost irreplaceable link in the aerospace sector, with growing orders for both military and space missions. In 2025 alone, it acquired five additional companies.
- Heico estimates its annual revenues will reach $5.4 billion by 2028, implying an average annual sales growth rate of about 8%. More importantly, it expects to generate nearly $1 billion in net profit by then, representing roughly 15% average growth compared to about $700 million in net profit this year. This outlook suggests acquisitions will not significantly dilute margins, while associated costs help build a “snowball effect” of scaling growth.
Heico shares (H1, D1 interval)
Yesterday, the stock closed at $315 per share. Just above this level lie the hourly EMA50 and EMA200. A breakout above $316 today could potentially open the way for a retest of historical highs. The market broadly agrees that Heico’s business is thriving. The only concern is valuation, which even after the recent pullback remains at historically elevated price-to-earnings and price-to-sales multiples.
Average annual revenue growth of 8% and net profit growth of about 15% do not fully justify multiples of around 60 times earnings—although Heico’s predictable business and dominance in niche industries make its long-term scaling prospects nearly certain. This dynamic has led to periodic episodes of overvaluation. On the other hand, the company expectations may be too defensive, leaving the market with the upside potential if investors will see improving margins and positive effects from acquisitions in the near-term.
Source: xStation5
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