Ducommun (DCO) reported a "strong" Q2, but much of the near-term upside is already reflected in the stock as revenue growth is expected to slow in the second half of the year, RBC Capital Markets said.
The investment firm said in a Thursday note that the highlight of the quarter was the 68% growth in the company's missiles and munitions business. RBC expects the company to drive robust growth over the next three to five years amid key missile programs and strong content on several platforms.
RBC said the company's guidance implies low-to-mid single-digit revenue growth in H2, reflecting a slowdown from H1, adding that it believes the near-term outlook is somewhat conservative.
Ducommun maintained its 2026 revenue outlook and continues to direct investors toward its September investor day. RBC said investors are likely to focus on the company's margin expansion potential and merger-and-acquisition opportunities.
RBC retained its sector perform rating on the stock and increased its price target to $200 from $175.
Price: $198.65, Change: $-2.81, Percent Change: -1.39%