Citi is placing its bets on Curtiss-Wright, an engineering firm renowned for its substantial involvement in the nuclear sector, predicting it will benefit significantly from the anticipated rise in global military expenditure. Analyst Jason Gursky has initiated coverage on this defense and aviation giant, whose legacy ties back to aviation pioneers like Glenn Curtiss and the Wright brothers. Gursky has given the company a “buy” rating with a twelve-month price target set at $410, suggesting a potential 20% increase from last Friday’s closing. Notably, the company’s shares have already seen a 6.2% climb this year, following impressive gains of 60% in 2024, 34% in 2023, 21% in 2022, and 20% in 2021.
Gursky emphasizes that Curtiss-Wright is well-positioned to harness growth opportunities within the aerospace and defense sectors, particularly with what he describes as “nuclear optionality.” The analyst pointed out that global military spending is expected to rise throughout the decade as nations strive to mitigate both short- and long-term geopolitical threats across Europe and the Pacific. Citigroup is optimistic about Curtiss-Wright’s ability to leverage this trend effectively, projecting the company could be net cash positive by 2026, drawing confidence from its historical capability to de-leverage its balance sheet.
The analyst anticipates that Curtiss-Wright will achieve 13% earnings growth through 2027, along with a steady conversion of cash. “We expect DoD spending trends and initiatives to accelerate revenues in areas like Aircraft, Shipbuilding, and C4I spending,” Gursky highlighted in a client note on Tuesday. By C4I, he refers to investments in “Command, Control, Communications, Computers, and Intelligence” systems. He also stated, “Increased production rates for new aircraft are poised to boost aerospace and industrial aftermarket revenues, while the global quest for more efficient energy solutions bodes well for nuclear original equipment and aftermarket revenue.”
Key growth drivers for Curtiss-Wright, as Gursky outlines, include heightened original equipment manufacturing for commercial aircraft, an uptick in nuclear contract awards, and strategic mergers and acquisitions to strengthen their nuclear power and defense capacities. The timing of commercial nuclear aftermarket plant life extension contracts, both domestically and internationally, along with ongoing collaborations with small modular reactor (SMR) entities like NuScale, TerraPower, and X-energy, could act as further catalysts for the stock.
One notable partnership involves Curtiss-Wright’s preferred strategic supplier agreement with X-energy in 2022, aimed at advancing the design and deployment of X-energy’s Xe-100 advanced SMRs, indicating the firm’s proactive approach to future growth.
