VSE (VSEC) is expected to deliver organic growth of 10% in Q1, but investors will be more focused on the company's positioning related to the macro environment in H2, RBC Capital Markets said in a Thursday note.
The company stated that it did not expect major near-term risks related to the US-Iran conflict, citing steady inventory levels, pricing, and near-term demand, as well as noting that airlines appear largely booked through July and August, according to the firm.
VSE also believes that recent airline capacity cuts are due to the broader macro environment, adding that only a reduction in the double digits or more would likely result in inventory draw-downs or aircraft retirement acceleration, the note said.
The company's acquisition of Precision Aviation Group, which could close ahead of or concurrent with Q1 earnings, is conservatively projected to add around $400 million in revenue, as well as result in incremental savings and cross-selling opportunities, RBC analysts said.
VSE is expected to report Q1 earnings after market-close on Tuesday.
RBC maintained the company's stock rating at outperform and lowered the price target to $220 from $250.
Price: $171.58, Change: $-0.10, Percent Change: -0.06%