Melrose Industries Shares Plunge, But Analyst Says Sell-Off Has Gone Too Far

Melrose Industries shares fell 11.6% on Friday after the company issued its 2025 audited results alongside weaker-than-expected revenue guidance for 2026. 

The aerospace parts supplier projected sales of £3.75 billion to £3.95 billion, short of analysts’ estimates of £4.01 billion compiled by LSEG.

Despite the sharp decline, aerospace and defense analyst Dhierin-Perkash Bechai argued that the market reaction appears excessive. 

Writing on the Seeking Alpha platform, he said, “Melrose Industries remains a strong buy despite a 12.5% post-earnings selloff and underwhelming 2026 guidance.”

Bechai, who runs the investing group The Aerospace Forum, noted that the company delivered “8% sales growth, 23% operating profit growth, and significant margin expansion,” supported by strength in its Engines division and a robust aftermarket mix.

While Melrose’s 2026 revenue outlook signals roughly 7 percent growth at the midpoint, Bechai suggested that investor expectations may have been unrealistic.

“I had modeled sales of £3.83 billion, which is roughly the midpoint of the guidance,” he wrote, adding that the outlook “does not put downward pressure on the sales forecast, but it merely confirms it.”

Melrose expects operating profit to rise 8 percent to 16 percent to between £700 million and £750 million next year. Free cash flow is projected to grow from £125 million to as much as £200 million, representing a potential 20 percent to 60 percent increase.

Bechai highlighted that the stock trades at a discount to aerospace peers and is supported by improving operating leverage, a favorable aftermarket mix, and a new share repurchase program.