TransDigm Down After Short-Seller Report Targets Defense Business, but the Real Risk Is M&A
TransDigm’s stock declined 10% on Jan. 20 after a report by noted short seller Andrew Left compared the company to Valeant. In particular, Left raises concerns about TransDigm’s exposure to increased pricing scrutiny from the U.S. Department of Defense given the company's significant pricing power. We think the market is overreacting a bit to the headlines, mainly because the names Valeant and Trump are being placed next to TransDigm's. In our view, the stock looks undervalued, and the real bet ...TransDigm Group is a holding company. Through its subsidiaries, the company designs, produces and supplies aircraft components for use on commercial and military aircraft. The company's segments are: Power and Control, which develops, produces and markets systems and components that provide power to or control power of the aircraft utilizing electronic, fluid, power and mechanical motion control technologies; Airframe, which develops, produces and markets systems and components that are used in non-power airframe applications utilizing airframe and cabin structure technologies; and Non-aviation, which develops, produces and markets products for non-aviation markets.
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