Applied Aerospace & Defense Outlook Supported by Defense Demand and Backlog, RBC Says

MT Newswires Live10-13

Applied Aerospace & Defense (AADX) expects mid-teens organic revenue growth in 2027 and 2028, with more than 80% of 2027 revenue backed by backlog or long-term agreements, RBC Capital Markets said in a Monday note.

The brokerage said growth should be supported by missile and munitions programs, rotorcraft aftermarket demand, space launches and emerging defense aviation programs, including GMLRS, THAAD, BLU-136, New Glenn, MV-75, F/A-XX and F-47.

Management expects mergers and acquisitions to remain a key growth driver, while integrating previous acquisitions could improve vertical integration and operational efficiency, supporting margins and free cash flow, RBC said.

RBC said achieving 2026 targets remains a priority, with mid-20% adjusted EBITDA margins supported by specialized manufacturing, sole-source content, operating leverage and pricing. However, uncertainty around defense budgets and program execution weighs on investor confidence in the margin outlook.

RBC maintained its outperform rating on the stock and lowered its price target to $21 from $24.

Applied Aerospace & Defense shares were down 2.9% in Tuesday trading.

Price: 10.42, Change: -0.35, Percent Change: -3.25

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