Wolfe Research singled out five aerospace and defense issuers it views as well positioned for a robust second-quarter reporting season. Across the names, analysts attribute the outlook to consistent defense demand and renewed aerospace market activity that should support revenue and margin trajectories.
Summary
Wolfe expects a group of companies to deliver beat-and-raise quarters, with a mix of business drivers including solid order books, margin improvement, recent strategic acquisitions, favourable tax treatment in the quarter, and calendar-related comparisons that can boost organic growth figures. Several of the firms covered could update full-year guidance higher following their next reports.
Key points
- Steady defense demand underpins expected outperformance across multiple stocks, supporting order flows and backlogs.
- Aerospace market strength, including commercial aftermarket recovery and jet-engine growth, is projected to drive revenue and margin expansion for some companies.
- Corporate actions and structural factors - such as acquisitions, buyback authorizations, and quarter-specific tax or calendar comparisons - are cited as contributors to potential upside in earnings per share.
Companies highlighted
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Curtiss-Wright (CW) - Wolfe Research expects another beat-and-raise quarter for Curtiss-Wright, with core defense markets tracking above expectations. The firm points to unexpected upside in Curtiss-Wright's aerospace and industrial segments. A lower effective tax rate in the first quarter, compared with the full-year average, is expected to lift reported earnings per share above consensus. Orders should remain solid in the first quarter, with momentum building into the second quarter in the Defense Electronics business.
Analysts also note that an AP1000 order anticipated in 2026 remains on schedule, and they cite a recent 40,000-page construction license filing in Poland as a potential precursor to that order. For context on recent performance, Curtiss-Wright reported fourth-quarter 2025 revenue of $947 million and earnings per share of $3.79, which exceeded analyst forecasts.
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Howmet Aerospace (HWM) - Wolfe projects a core beat-and-raise for Howmet, aided by the recent completion of the CAM acquisition. While the stock carries an elevated multiple, the research team believes downside risk is limited and that a continued track record of beat-and-raise results should remain attractive to investors.
Management guidance into the second quarter is expected to meet or exceed consensus, and Wolfe does not anticipate concerns from incremental Section 232 tariffs or other risk factors. The company has also received positive analyst actions recently, with firms including Argus and RBC Capital raising their price targets on the stock, reflecting perceived strong demand.
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ATI Inc. (ATI) - Described by Wolfe as the top-performing stock in its aerospace coverage year-to-date, ATI is expected to continue its momentum with the potential for a quarterly beat and a possible raise to 2026 guidance. First-quarter sales growth is forecast to be modest, roughly 4 percent, but the company should post notable year-over-year EBITDA margin expansion of about 200 basis points to nearly 19 percent.
Growth is expected to be driven primarily by aerospace and defense end markets, with jet-engine products leading at mid-teen growth rates. ATI reported fourth-quarter 2025 revenue of $1.2 billion that beat expectations, and its board authorized an additional $500 million for the company's stock repurchase program.
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Woodward (WWD) - Wolfe anticipates a strong quarter for Woodward that could enable a fiscal 2026 guidance increase. Commercial aftermarket growth is projected to decelerate from the 40-50 percent levels seen in recent quarters to the high-teens range, which Wolfe interprets as still indicating solid demand.
Woodward announced an agreement to acquire Valve Research & Manufacturing, a supplier of high-precision flow control valves. The company has also received positive analyst attention, including an initiation of coverage with an overweight rating from Wells Fargo.
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L3Harris Technologies (LHX) - Wolfe expects L3Harris to deliver among the strongest organic growth rates in the defense cohort, in part due to an extra work week versus the first quarter of 2025. The firm also anticipates favourable margin comparisons year-over-year given easier comps driven by charges in the prior year.
L3Harris recently appointed Kenneth Sharp as its new chief financial officer and secured contracts to support the U.S. Space Development Agency's Tranche 3 Tracking Layer satellite program.
Risks and uncertainties
- Order momentum and timing - while orders are expected to remain solid for some businesses, future timing or confirmation of anticipated orders such as the AP1000 remains subject to project development and contractual milestones, which could affect near-term expectations.
- Macro and policy factors - potential tariff actions or other trade-related developments could influence costs or competitiveness; Wolfe does not expect immediate concerns for Howmet but notes the broader policy environment as a variable.
- Magnitude of commercial aftermarket normalization - companies reporting slower but still-robust aftermarket growth could face investor scrutiny if the stepdown from recent exceptional growth is larger than forecast.
Bottom line
Wolfe Research identifies Curtiss-Wright, Howmet Aerospace, ATI Inc., Woodward, and L3Harris Technologies as candidates to report strong Q2 performance, driven by a mix of defence demand, aerospace recovery, acquisitions, and company-specific timing or tax factors. The firm expects several of these names may raise full-year guidance following their upcoming reports, contingent on execution and the realization of anticipated orders and margin improvements.