Citi says buy this little-known nuclear play

Citi expects Curtiss-Wright , an engineering company with a big nuclear business, to ride the wave of increased global military spending. Analyst Jason Gursky initiated research coverage of the defense and aviation company, which traces its roots back to the original pioneers of aviation , Glenn Curtiss and Wilbur and Orville Wright, with a buy rating and a 12-month price target of $410, implying about 12% potential upside. This year, shares have advanced about 6.2% after soaring 60% in 2024, 34% in 2023, 21% in 2022 and 20% in 2021. According to the analyst, saying Curtiss-Wright can ride growth in the aerospace and defense industry with “nuclear optionality.” He expects global military spending to increase throughout the rest of the decade in an effort to deter short- and longer-term geopolitical concerns in Europe and the Pacific. Gursky is optimistic that Curtiss-Wright can capitalize on this trend to become net cash positive by 2026, particularly given its strong history of being able to de-lever its balance sheet. He expects the company to boast 13% earnings growth through 2027 and consistent cash conversion. CW 1Y mountain Curtiss-Wright stock over the past year. “We expect DoD spending trends and initiatives that prioritize Aircraft, Shipbuilding, and C4I spending to drive defense end-market revenues,” Gursky wrote in a Tuesday note to clients. “Higher production rates for new aircraft are likely to increase Aerospace & Industrial aftermarket revenues while global demand for more efficient energy solutions suggests solid nuclear OE [operating expense] and aftermarket revenue visibility.” Key catalysts for Curtiss-Wright’s growth include higher OE build rates for commercial aircraft platforms, more nuclear awards that expand Curtiss-Wright’s footprint in commercial nuclear power OE and aftermarket areas, and mergers and acquisitions announcements to increase nuclear power, defense, and other core capabilities, according to Gursky. He also mentioned potential industry developments such as the timing of contract awards in the Commercial Nuclear Aftermarket plant life extensions that continue in the U.S. and abroad, as well as existing small modular reactor, or SMR, partnerships between Curtiss-Wright and NuScale, TerraPower and X-energy, and the potential for new ones, as events that could affect the stock. A partnership example includes Curtiss-Wright’s 2022 preferred strategic supplier agreement with X-energy to to advance the design and deployment of X-energy’s Xe-100 advanced SMRs.