Will TAT Technologies Overcome Its MRO Softness and Shine Again?

Increasing investments from global airlines in the maintenance, repair, and overhaul (“MRO”) of their ageing fleet to meet the rapidly rising air passenger traffic have been fueling growth for TAT Technologies Ltd. TATT, a provider of aircraft MRO services. Rising defense budgets, which are boosting the demand for the production and modernization of military jets worldwide, also remain a growth driver for TATT.

However, in the first quarter of 2025, the company experienced softer demand in its MRO business due to supply-chain challenges and the timing of orders. This softness mellowed down to moderate MRO intake in the second quarter.

With the ongoing tariff-related uncertainty expected to further exacerbate the already weak supply-chain condition of the aerospace industry, TATT’s MRO business may continue to be under pressure for some time in the near term. To this end, the company’s CEO also mentioned in the second-quarter earnings call that he expects ongoing quarter-to-quarter volatility, including potential short-term fluctuations in MRO intake, to continue in the near term.

Nevertheless, since July 2025, TATT’s MRO intake has started to recover, which, along with its recent contract wins, might result in an uptick in its MRO business’s revenues, probably by the end of 2025 or the first half of 2026.

Notably, in August 2025, TATT secured a $12 million contract to deliver MRO services for the GTCP331-500 APU on Boeing 777 aircraft. Moreover, in May, the company signed an MRO agreement with a leading global cargo carrier, extending its APU repair work on 767 and 757 fleet to cover the airline’s worldwide operations, while also adding support for B737 and A300 platforms.

Other Companies Expanding MRO Capabilities

Like TAT Technologies, other aerospace and defense stocks, such as RTX Corporation RTX and The Boeing Company BA, are also strengthening their MRO networks to meet the rising global demand.

Notably, in February, RTX Corp.’s Pratt & Whitney unit announced a partnership with Sanad Group to expand its global MRO footprint for GTF engines. The collaboration includes establishing a new state-of-the-art MRO facility in Al Ain, UAE.

Meanwhile, in April, Boeing signed an agreement with Metallic Ladder to distribute specialized ground support equipment for aviation maintenance. In May, Boeing opened its third distribution center in Germany, which has the capacity to store more than 9,000 unique parts for Boeing aircraft.

TATT’s Price Performance, Valuation and Estimates

Shares of TATT have gained 110.4% in the past year compared with the industry’s 35.5% growth.

The company shares are trading at a discount, with its forward 12-month Price/Sales being 2.16X compared with its industry’s average of 10.05X.

The Zacks Consensus Estimate for TATT’s near-term earnings has improved over the past 60 days.

TATT stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research