Ducommun Investor Day Focus Likely to Be Margin Expansion, M&A Deals, RBC Says
Ducommun's (DCO) investors will likely be eyeing topics like the pace of its margin expansion, growth outlook and M&A deals at the company's investor day on Thursday, RBC Capital Markets said in a note emailed Tuesday.RBC noted that Ducommun has been one of the strongest performing shares in the aerospace and defense sector this year, with the stock gaining about 73% year to date.Investors in Ducommun "have focused on the missile exposure, margin expansion, and the company is delivering towards its 2027 targets," the note said.Consensus forecasts for the company are for about 18.3% 2027 adjusted EBITDA margins compared with the target of about 18%, and revenue estimates of $971 million, versus the $950 million target, RBC said.The investment firm also highlighted that Ducommun has increased its gross margins by 620 basis points since 2022, and the 2027 adjusted EBITDA estimates may be conservative as it has significant missile and munition exposure which "should support near-term strength in its defense portfolio."Meanwhile, M&A deals may also be a potential catalyst, the note said. "An acceleration in the engineered products portfolio through potential M&A would be a positive in our view," RBC said, adding the company has about $400 million in M&A capacity through 2027.RBC kept Ducommun's sector perform rating and $200 price target.Price: $159.36, Change: $-5.14, Percent Change: -3.12%
