US Aerospace & Defense "From A to D - feedback to our SARO upgrade to Buy ..."

Research evidence excerpt

US Aerospace & Defense "From A to D - feedback to our SARO upgrade to Buy ..."

Global Research

18 May 2026ab

US Aerospace & Defense Equities

AmericasFrom A to D - feedback to our SARO upgrade to

Buy Aerospace

Gavin Parsons

Analyst

gavin.parsons@ubs.com

Feedback to our SARO upgrade was mixed +1-212-713 2389

In our weekly note, we summarize top topics, notes we've published, MAX/787 Joao Santos

tracking, and more. Associate Analyst

joao.santos@ubs.com

Top topics / sentiment / most discussed:

+1-212-713 1437

SARO upgrade: We did not receive a great deal of pushback, but neither was Max Miller

there much agreement. In fact the most common theme was a below-average Associate Analyst

level of familiarity with the business and thus low conviction in a view in either max.miller@ubs.com

direction - which in our perspective is an opportunity. Below we list the top +1-212-713 2613

areas of discussion with investors post our upgrade. Nicholas Labbadia

Associate Analyst

Private equity overhang: The most commonly cited overhang / negative.

nicholas.labbadia@ubs.com

Carlyle owns 25% and GIC owns 6% - down from 63/14% respectively +1-212-713 5573

post-IPO (per SEC filings). A tactical consideration, but one that is shrinking

and in our view in and of itself not a fundamental reason to avoid the stock.

Attractive valuation: Generally agreed, but low conviction in a clear

catalyst. We think improving cash conversion, a smaller PE overhang, and

resilient earnings should oil prices impact broader aftermarket would each

support re-rating.

Uncertain cash flow: Currently low conversion and high seasonality. This

was a key consideration of our Neutral rating post IPO until last week.

Following the large 1Q working capital build, we believe cash flow can be a

steady trend higher from here.