Triumph Group Inc (NYSE:TGI) received a downgrade last month from a Truist Securities analyst.

While the company's transformation efforts have resulted in a "leaner, more focused portfolio," this is being overshadowed by the "uncertain aircraft production rates" of Boeing Co (NYSE:BA) and Airbus SE (OTC:EADSY), according to BofA Securities.

Analyst Ronald Epstein downgraded the rating for Triumph Group from Buy to Underperform, while reducing the price target from $17 to $12.

The Triumph Group Thesis: The Installations segment is producing 13 per month, significantly below the rate required for margin expansion, while Composites and Cabin Components are producing 30 per month, which has downside risk, Epstein said in the downgrade note.

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As the company's working capital needs grow, there would be risks to free cash flow generation, along with margin headwinds, he added.

While Triumph Group is ramping production and the inventory is being accepted by Boeing and Airbus, "we are concerned any further production cuts could lead to destocking," the analyst stated. "The destocking would compound existing FCF headwinds from the V-22 program sunsetting, OEM deferrals, inflation, and supply-chain shortages," he further wrote.

TGI Price Action: Shares of Triumph Group had declined by 5.35% to $12.83 at the time of publication on Tuesday.

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