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OEMs and flight data both support a return to growthWe believe that Q4'25 marked the end of a challenging period for CTT, where organic growth has been negative in 2024-2025 due to a slow OEM recovery and destocking in the aftermarket channel. FX has also become a major headwind, which we estimate accounted for half of the ~60% EBIT decline in FY'25. Currency aside, while also acknowledging that we have repeatedly overestimated the pace of the recovery, we argue that there is good support for CTT's guidance of higher sales in Q1'26 vs. Q4'25 in USD terms. First, both Boeing and Airbus have ramped up deliveries in 2025, and Boeing has also reaffirmed higher production in 2026. This, together with higher content per aircraft, should now drive clear growth in system sales. Second, flight traffic remains solid, inventory levels are better balanced, and CTT's installed base grew 10% in 2025, and is expected to grow >20% in 2026. This will drive higher aftermarket sales. Thus, we expect organic growth already in Q1'26 (+29%), which together with margins of ~20% in H1'26 and ~27% in H2'26 will drive ~20% EBIT growth in H1'26, and >100% in H2'26. Recovery aheadWe lower '26e-'27e EBIT by 35-24% due to FX, a lower 2025 base and slower system sales. From 2026e, the combination of accelerated OEM sales, and a recovering aftermarket business should drive ~40-30% organic sales growth and ~70-40% EBIT growth in '26e-'28e. Multi-year double-digit growth potentialDespite seeing tougher headwinds than we had previously anticipated, CTT's core strengths remain: the company benefits from a near-monopolistic position, strong demand, and its margin-accretive AM business. This should drive long-term double-digit earnings growth, while the share is now trading at 18-10x EBIT '26e-'27e (23x L10Y), offering 5-7% dividend yields and ~30-40% ROCE. |