Graham (GHM) could extend its strong revenue growth, improve margins and expand production capacity as recent investments begin to deliver results, while strengthening its position in defense and space markets, Oppenheimer said in a note Tuesday.

Fiscal 2026 backlog rose 29%, while a roughly 1.5x book-to-bill ratio provides strong visibility into future sales, primarily in defense and space.

The investment firm expects Graham's roughly $50 million investment in facilities, testing, skilled workers and automation to improve output, lower costs and support further growth, while large nuclear programs for submarines and aircraft carriers should increase over time, supported by new contract wins, strong delivery performance and added capacity.

New ERP system at the Batavia operation in August is expected to improve processing, raise efficiency and support further margin gains and the Flacktek acquisition offers a major growth opportunity across about 30 markets, while Graham's energy and process business should benefit from high-margin aftermarket demand, according to the note.

The firm said the company is also starting to build an outbound sales strategy, which could bring in new customers and reduce its reliance on incoming orders.

Oppenheimer has an outperform rating, with a $130 price target for Graham.

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