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On Thursday, RBC Capital Markets adjusted its financial outlook for VSE Corporation (NASDAQ:VSEC), a company specializing in aerospace and defense services. Analyst Ken Herbert at RBC Capital increased VSE’s price target from $140.00 to $150.00 while reiterating an Outperform rating on the stock. The stock, currently trading at $127.99, has shown remarkable momentum, with InvestingPro data showing a 34% year-to-date return and approaching its 52-week high of $129.07.
VSE Corporation recently reported a substantial 58% revenue growth for the first quarter of 2025 and achieved an adjusted EBITDA margin of 15.8%. This performance marked the company’s initial quarter of financial results since its transition to focusing solely on the aerospace and defense (A&D) sector. The company also confirmed that it would maintain its previously issued full-year guidance for 2025.
The analyst highlighted VSE’s strong execution and the positive outlook for the company’s fundamentals, which continue to drive favorable sentiment among investors. According to Herbert, the current trends in the aftermarket are supportive of the company’s performance. Despite traditionally strong first-quarter margins, the analyst perceives a degree of conservatism in the full-year outlook, suggesting there may be potential for upward revisions.
Furthermore, the recent acquisition of Turbine Weld is expected to bolster VSE’s guidance for the year. Financial stability is also a key factor, with VSE showing a proforma net leverage of 2.2 times, alongside a recent refinancing that provides additional balance sheet flexibility. As of the latest report, VSE holds $158 million in cash and credit facilities.
RBC Capital’s revised price target reflects confidence in VSE’s strategic direction and its ability to capitalize on opportunities within the aerospace and defense market. The firm’s Outperform rating indicates their belief that VSE’s stock will perform better than the overall market or its sector in the foreseeable future. With a market capitalization of $2.66 billion and a P/E ratio of 188.5, InvestingPro analysis suggests the stock is currently trading above its Fair Value. Investors seeking deeper insights can access VSE’s comprehensive Pro Research Report, one of 1,400+ detailed company analyses available on InvestingPro, which includes additional valuable metrics and expert analysis.
In other recent news, VSE Corporation reported its Q1 2025 earnings, revealing an EPS of $0.78, which exceeded analyst expectations of $0.70. Despite a revenue shortfall, the company saw a 58% year-over-year increase in consolidated revenues, reaching $256 million. Adjusted EBITDA for the quarter was $40 million, representing 15.8% of revenue. Following these strong results, Truist Securities raised VSE’s stock price target from $130 to $140, maintaining a Buy rating. The analyst emphasized the company’s robust performance amid integration efforts and noted that the cash burn was mainly due to growth investments through acquisitions. VSE also completed the sale of its Fleet segment and acquired Turbine Weld Industries, further solidifying its focus on aviation aftermarket services. The company reaffirmed its 2025 guidance, projecting aviation segment revenue growth of 35-40% and an adjusted EBITDA margin of 16-17%. VSE continues to expand its partnerships, including a new agreement with Eaton (NYSE:ETN) for MRO services, which is expected to enhance its aftermarket repair capabilities.
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