VSE’s Strong Q1 Performance and Strategic Focus on Aviation Aftermarket Drives Buy Rating

William Blair analyst Louie DiPalma has reiterated their bullish stance on VSEC stock, giving a Buy rating on May 8.

Louie DiPalma has given his Buy rating due to a combination of factors including VSE’s strong first-quarter performance and its strategic shift to focus solely on the aviation aftermarket distribution and repair sector. The company reported a robust 12% organic growth in the quarter, driven by its repair and distribution operations, and maintained a healthy aviation EBITDA margin of 16.9%.
Despite some short-term margin pressures from recent acquisitions, VSE’s management is optimistic about achieving synergies that will enhance margins over time. Additionally, the gradual impact of Boeing’s production rate increase on the aftermarket industry, coupled with VSE’s consistent success in securing new aerospace OEM contracts, positions the company well for future growth. The potential for accretive mergers and acquisitions, along with expected EBITDA growth, suggests a promising upside of over 15% for VSE’s shares, reinforcing the Buy recommendation.

In another report released on May 8, Benchmark Co. also maintained a Buy rating on the stock with a $140.00 price target.