StandardAero's (SARO) reset 2026 expectations and strong engine aftermarket outlook could support a re-rating of the stock, RBC Capital Markets said.
The brokerage said in a Thursday research note that it models 2026 and 2027 adjusted EBITDA margins of 14% and 14.2%. The company is expected to release its Q4 results Wednesday and has already pre-announced strong results, according to the note.
Large airlines are likely to shore up their maintenance, repair and overhaul supplier base for CFM LEAP engines. New contract announcements could be a positive catalyst for the company.
The company's mixed engine portfolio remains a positive. Consensus estimates now reflect the pass-through revenue headwind, which supports the 2026 setup. RBC expects growth to accelerate in the second half of 2026. However, supply chain issues and parts availability may persist through much of the year.
The brokerage has a outperform rating on the company's stock with a $37 price target.
Shares of StandardAero were up 1.3% in recent Friday trading.
Price: 31.85, Change: +0.41, Percent Change: +1.30