Top Aerospace & Defense Stocks to Watch, According to Wolfe Research

Investing.com -- Wolfe Research has identified five aerospace and defense stocks positioned for strong second-quarter performance, with analysts highlighting steady defense demand and aerospace market strength as key drivers across the sector.

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The firm’s analysis points to companies demonstrating consistent execution and growth potential, with several expected to raise full-year guidance following their upcoming quarterly reports.

1. Curtiss-Wright (NYSE:CW) - Wolfe Research expects the company to deliver another beat-and-raise quarter as core defense markets continue tracking ahead of expectations. The firm notes surprising upside opportunities in Curtiss-Wright’s aerospace and industrial businesses. First-quarter results should benefit from a lower tax rate compared to the full-year average, pushing earnings per share above expectations.

Orders are expected to remain solid in the first quarter and build momentum in the second quarter within Defense Electronics. The AP1000 order anticipated in 2026 remains on track, including a recent 40,000-page construction license filing in Poland that analysts view as a precursor to an order.

Curtiss-Wright reported fourth-quarter 2025 earnings that surpassed analyst forecasts, with revenue of $947 million and earnings per share of $3.79.

1. Howmet Aerospace (NYSE:HWM) - The firm anticipates a core beat-and-raise, enhanced by the recent completion of the CAM acquisition. Despite an elevated multiple, Wolfe Research believes the absence of downside risk and an intact beat-and-raise track record will continue attracting capital. Management guidance heading into the second quarter is expected to meet or exceed consensus estimates, with no concerns anticipated regarding incremental 232 tariffs or other risk factors.

In recent news, Howmet Aerospace has received several positive analyst actions, with firms including Argus and RBC Capital raising their price targets on the stock, citing strong demand.

1. ATI Inc. (NYSE:ATI) - Described as the best-performing stock in Wolfe’s aerospace coverage year-to-date, ATI is expected to maintain momentum with potential for a beat and possible 2026 guidance raise. While first-quarter sales growth will be limited to approximately 4 percent, the company should see strong year-over-year EBITDA margin expansion of roughly 200 basis points to nearly 19 percent. Growth is largely driven by aerospace and defense, with jet-engine products leading at mid-teen growth rates.

ATI Inc. announced fourth-quarter 2025 results that exceeded expectations, with revenue reaching $1.2 billion. The company’s board also authorized an additional $500 million for its stock repurchase program.

1. Woodward (NASDAQ:WWD) - Wolfe expects a strong quarter that will allow the company to raise fiscal 2026 guidance. Commercial aftermarket growth is projected in the high-teens range, representing a stepdown from the 40-50 percent levels seen in recent quarters but still indicating solid demand.

Woodward announced an agreement to acquire Valve Research & Manufacturing, a maker of high-precision flow control valves. The company also received positive ratings from several firms, including an initiation of coverage with an overweight rating from Wells Fargo.

1. L3Harris Technologies (NYSE:LHX) - The firm anticipates L3Harris could post the highest organic growth among defense names, partly helped by an extra work week versus the first quarter of 2025. Margin performance should show strong year-over-year results given easy comparisons from last year’s charges.

L3Harris Technologies appointed Kenneth Sharp as its new Chief Financial Officer. The company also awarded contracts to support the U.S. Space Development Agency’s Tranche 3 Tracking Layer satellite program.

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