This analyst just raised his price target on Magellan Aerospace

Paradigm Capital analyst J. Marvin Wolff raised his target on Magellan Aerospace (Magellan Aerospace Stock Quote, Chart, News, Analysts, Financials TSX:MAL) to $33.25 from $28.50, maintaining a “Buy” rating after in-line first-quarter results.

Magellan reported Q1 revenue of $285.1-million, EBITDA of $36.9-million and EPS of $0.29, compared with Wolff’s estimates of $281.2-million, $38.4-million and $0.35. In his May 11 research note, Wolff said the EPS miss reflected $3.2-million, or $0.06 per share, in legal costs tied to environmental claims litigation in Torrance, California.

Wolff said Magellan is positioned to benefit from higher commercial and military aircraft build rates, including Airbus’s A320 family, Boeing’s 737 recovery and the Joint Strike Fighter program.

Airbus and Boeing production rates are improving as supply-chain issues ease, which should allow Magellan to push more volume through its existing fixed assets and improve margins.

Wolff said there are growing military opportunities as defence spending rises. Magellan could benefit from submarine-related opportunities involving TKMS and Hanwha, as well as potential future Canadian fighter jet orders, though those programs may take several years to contribute.

Magellan ended the quarter with $51-million in cash and $75-million in debt, or net debt of $24-million.

Wolff said his higher target is based on 11x his 2027 EBITDA estimate, up from 10x previously, reflecting improving build rates and emerging military opportunities.

He expects Magellan to generate Adjusted EBITDA of $148.1-million on revenue of $1.133-billion in fiscal 2026, improving to $177.0-million on revenue of $1.220-billion in fiscal 2027.

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