Defense Momentum, ‘Show-me‘ Execution; Initiate at EW and $23 PT

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Defense Momentum, ‘Show-me‘ Execution; Initiate at EW and $23 PT

ycle, but Balanced Risk-Reward § = Consensus data is provided by Refinitiv Estimates

e = Morgan Stanley Research estimates

Applied Aerospace & Defense (NYSE: AADX) is an advanced design, engineering, Quarterly EPS ($)

and manufacturing company that produces a wide range of componentry and Quarter 2025 2026ePrior Current2026e 2027ePrior Current2027e

subsystems for Defense and Space end-markets. Underlying AADX’s portfolio of Q1 - - (0.09)a - -

>2,250 products – which spans aircraft structures, missile bodies, landing gear, Q2 - - (0.00) - -

Q3 - - 0.07 - -

radomes, and more – is deep expertise in material science and IP-enabled, Q4 (0.82) - 0.11 - -

advanced manufacturing processes. These processes and knowhow – when e = Morgan Stanley Research estimates, a = Actual Company reported data

combined with the company’s ~1.5mn sq. ft. of production footprint – make AADX a

supplier of choice for traditional Defense primes and new Defense tech players

(e.g., neo-primes) alike. We see AADX as a way to play the broader Defense

upcycle, but early risks associated with a recently-combined company temper the

outlook. The company is currently trading at ~$21 (up ~3% versus the IPO price of

$20 since the first day of trading on June 3, 2026). At current levels, risk-reward

screens balanced, in our view. We initiate at an Equal-weight rating and a PT of $23.

Limited Operating History as a Combined Entity

While AADX has decades of Defense & Space heritage via its legacy businesses, the Morgan Stanley does and seeks to do business with

entity as a whole is newly-formed. AADX was created through the mergers of companies covered in Morgan Stanley Research. As a result,