Graham Corporation. Buy, Sell or Hold?

Beacon Securities analyst Russell Stanley reiterated a “Buy” rating on Graham Corporation (Graham Corporation Stock Quote, Chart, News, Analysts, Financials NYSE:GHM) and raised his price target to $90.00 from $74.00 in a January 26 report, citing a combination of upward estimate revisions and valuation multiple expansion.

The update follows Graham’s announcement earlier in the day that it has agreed to acquire privately held FlackTek for $35-million, while the company is also scheduled to report quarterly results on February 6.

Graham designs and manufactures custom-engineered, mission-critical fluid, power, heat-transfer and vacuum technologies for the defence, energy and process, and space markets. The company is headquartered in Batavia, New York.

Stanley said the FlackTek acquisition establishes a third operating platform focused on advanced mixing and materials processing, alongside Graham’s existing vacuum and heat-transfer and turbomachinery businesses. The transaction includes $30-million in cash and $5-million in equity, implying roughly 12x estimated fiscal 2026 Adjusted EBITDA and just under 1.2x annualized revenue of about $30-million. The cash portion was funded through existing liquidity and an expanded revolving credit facility, now increased to $80-million from $50-million, leaving pro forma leverage at a manageable 1.2x. Additional earnouts of up to $25-million are payable over four years based on Adjusted EBITDA performance.

“FlackTek’s strength in advanced materials processing represents a third core platform for Graham,” Stanley said, noting the business specializes in high-performance, bladeless centrifugal mixing systems with applications across defence, aerospace and industrial markets.

He added that FlackTek contributes approximately $5-million to Graham’s backlog, which stood at about $500-million as of September 30, and carries structurally higher gross margins.

Stanley raised his next-fiscal-year Adjusted EBITDA forecast to $41-million from $38-million, conservatively assuming no incremental growth from FlackTek beyond current levels. He also increased his valuation multiple to 24x forward Adjusted EBITDA from 22x, which he said still represents a discount to peers.

“The technical picture continues to look very strong, with the stock trending upward to new all-time highs supported by rising momentum,” he said.

Stanley forecasts Graham will generate $23-million in Adjusted EBITDA on $239-million in revenue in fiscal 2026, improving to $41-million on $292-million in revenue in fiscal 2027.

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