Magellan Aerospace wins huge target raise from this bank

Paradigm Capital analyst J. Marvin Wolff says Magellan Aerospace (Magellan Aerospace Stock Quote, Chart, News, Analysts, Financials TSXV:MAL) should benefit from Canada’s selection of the German-built TKMS 212 CD submarine, given the company’s teaming agreement tied to torpedo work.

In a July 7 update, Wolff maintained his “Buy” rating on Magellan and raised his target to $41.00 from $33.25.

Canada selected the TKMS 212 CD as its preferred submarine for a new fleet, with negotiations now expected to run into 2027. Wolff said Magellan has a teaming agreement with TKMS to support the torpedo requirement for the 12-submarine program, though details on scope and timing have not been disclosed.

Wolff estimates the initial torpedo supply for all 12 submarines could reach US$576-million.

The analyst said Magellan remains a play on improving commercial and military aircraft cycles, with exposure to the Airbus A320 family, Boeing 737, Joint Strike Fighter and torpedo work.

Wolff expects stronger financial performance from 2026 through 2028 as higher aircraft component volumes move through the company’s fixed-asset base, supporting margin expansion.

He also said defence spending is in growth mode, driven by military activity and higher NATO commitments. Magellan could benefit from opportunities tied to the TKMS submarine and, over time, additional Canadian fighter jet orders.

Wolff said while U.S. tariff uncertainty remains unresolved, the TKMS opportunity is not affected by tariffs.

He based his new target on 12 times his 2028 Adjusted EBITDA estimate of $195-million, up from his prior 11-times multiple.

Wolff expects Magellan to generate Adjusted EBITDA of $147.2-million on revenue of $1.13-billion in fiscal 2026, improving to Adjusted EBITDA of $177.0-million on revenue of $1.22-billion in fiscal 2027.

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