Graham Corporation wins price target raise at this bank

Beacon Securities analyst Russell Stanley says Graham Corporation’s (Graham Corporation Stock Quote, Chart, News, Analysts, Financials NYSE:GHM) new multi-year targets add visibility to a broader growth story that remains underappreciated by the Street.

In a June 22 update, Stanley maintained his “Buy” rating and raised his target on Graham to $130.00 from $115.00 after attending the company’s investor day at the New York Stock Exchange.

“While we continue to view the company’s mission-critical content on US Navy subs/carriers favourably, we believe the company’s broader opportunity set is not fully appreciated by the street, and we found the associated update very encouraging,” Stanley said.

Management reiterated fiscal 2027 guidance for revenue of $285-million to $295-million and Adjusted EBITDA of $35-million to $40-million. It also introduced a new three-year plan targeting annual organic revenue growth of 8% to 10% and Adjusted EBITDA margins of 14% to 16%.

Based on the midpoint of fiscal 2027 guidance and assuming no further acquisitions, Stanley said the plan points to fiscal 2029 revenue of $340-million to $350-million and Adjusted EBITDA of $50-million to $55-million.

Stanley said Graham has a track record of exceeding its stated growth targets, with organic revenue growth of 16% in fiscal 2026, 12% in fiscal 2025 and 17% in fiscal 2024. Margin improvement is expected to come from scale and revenue mix, with management targeting a longer-term revenue split of about 50/50 between defence and commercial markets.

With better revenue and EBITDA visibility, Stanley increased his valuation multiple to 31 times, driving the higher target.

He said M&A remains part of the story, with management reporting a full pipeline and prioritizing targets with $20-million to $100-million in revenue at less than 12 times EBITDA. Graham’s liquidity remains above $100-million.

Stanley said Graham is also shifting from solving one-off customer problems to developing broader products that can be commercialized across multiple markets.

“This transition from a 1-to-1 to a 1-to-Many model should support improved market penetration and production scale economies,” Stanley said.

The analyst said high-growth opportunities include commercial nuclear, undersea warfare and motor controllers, with Graham also likely to add international fabrication capacity over time.

Stanley expects Graham to generate Adjusted EBITDA of $40-million on revenue of $290-million in fiscal 2027, improving to Adjusted EBITDA of $49-million on revenue of $321-million in fiscal 2028.

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