Near-term margin weakness at ES not upsetting the long-term profitability ramp; reiterate Buy rating and $35 PT

研报英文原文证据摘录

Near-term margin weakness at ES not upsetting the long-term profitability ramp; reiterate Buy rating and $35 PT

Investment Thesis

StandardAero is uniquely positioned to capitalize on a multi-year structural supercycle in the aerospace engine aftermarket.

The company benefits from a dual tailwind: an aging legacy commercial aircraft fleet requiring more frequent and extensive

maintenance, and well-documented durability challenges on next-generation engines (particularly the CFM LEAP) that are driving

overhaul demand above fleet growth. Furthermore, we see a clear path to margin expansion driven by outsized growth in SARO’sAEROSPACE highly accretive Component Repair Services (CRS) segment. Supported by formidable barriers to entry - including a 100+ year

operating history, 50+ global facilities, and over 40 OEM authorizations - SARO’s deep-rooted competitive moat justifies a premium

valuation.AND

Upcoming Catalysts Price Performance

■ LEAP profitability inflection (expected in 1H26). $38

■ LEAP Full Performance Restoration Shop Visits (PRSVs) ramp. $36

■ Capacity expansion (Winnipeg expected to be complete in 2H26). $34DEFENSE

$32

$30

$28

$26EQUITY Base Case Assumptions: $35 Price Target

$24

■ 9% sales CAGR through 2030. $22

■ 11% adjusted EBITDA CAGR through 2030, largely driven by margin expansion at Jun-25 Jul-25 Aug-25 Sep-25 Oct-25 Nov-25 Dec-25 Jan-26 Feb-26 Mar-26 Apr-26 May-26 the CRS segment.

SARO

■ 80-100% FCF conversion through the outyears. S&P 500 (rebased)

Source: FactSetRESEARCH

Upside Scenario Company Description

■ Faster-than-anticipated LEAP ramp and profitability inflection. StandardAero (SARO) is a leading

■ Accelerated supply chain normalization. independent maintenance, repair, and

■ Additional OEM platform wins (widebody, new BizAv engines).