Walton's Weekly Flyby: In focus on B737 cash margins; Can LHX makes radios into C-UAS systems?

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Walton's Weekly Flyby: In focus on B737 cash margins; Can LHX makes radios into C-UAS systems?

Aerospace & Defense

Aerospace - Market Overweight

Defense - Market Overweight

Walton's Weekly Flyby: In focus on B737 cash margins; June 7, 2026

Can LHX makes radios into C-UAS systems?

The Wolfe Byte

In this weekly, among other things, we lay a path for how 737MAX margin improvement could become clearer (and

compelling) in the coming Qs. In defense, LHX is transforming its radio into a counter-drone weapon that should

spur incremental demand for the high-margin product.

Aerospace & Defense: Updates from the week

It was an active week on the deal front with ARXS, VOYG, and HEI announcing deals. ARXS announced 2 deals for

a combined ~$900M while VOYG's deal could be worth up to $300M but beyond that the company also got a good

update on CLD (NASA abandoned core module concept). HEI kept their M&A train going, announcing their 5th deal of

the year, Cook Defence Systems, which we see as likely a ~$200-300M deal that should bring ~$50M of run-rate sales

to FSG. Lastly, SARO announced a surprising CEO transition that the market didn't appear to fully like but we do see

the incoming CEO as a logical fit given his MRO experience.

Aerospace: Peeling back the HONA onion, BA 737 cash potential & 777X TIA 4B green-light, GTF AoG update;

With the Honeywell Aero spin set for late June, we attended the company's Investor Day. Inside, we peel back the onion

on HONA's product/end-market disclosures and provide broad thoughts on the 2030 targets presented. A key driver of

BA's ramping FCF is the 737's steep climb in production and even steper climb in margins. Key to investor confidence

on margins will be seeing the 737 deferred production peak and begin to fall in 2027.