Jul. 9 at 10:16 PM
B. Riley Securities reiterated VSE Corporation as its top aerospace and defense pick, maintaining a Buy rating and a
$270 price target. The firm said VSE is successfully transforming into a higher-margin aviation aftermarket platform, with the integration of PAG progressing ahead of plan and expected synergies exceeding
$15 million.
B. Riley expects adjusted EBITDA margins above 20%, driven by the company's expanding portfolio of proprietary products and services for business and general aviation. The firm believes this business remains undervalued and could support a valuation re-rating closer to peers such as HEICO.
The brokerage also said recent Middle East geopolitical tensions have not materially affected VSE's operations and expects strong second-quarter results with the potential for higher guidance. The outlook follows a first-quarter earnings beat, with EPS of
$1.17 and revenue of
$324.6 million, both above analyst estimates.
$VSEC