Morgan Stanley boosts RBC Bearings price target amid growing defense demand

On May 20, 2025, Morgan Stanley's analyst Kristine Liwag reported optimistic projections regarding RBC Bearings amid strengthening demand in the defense sector. The company saw a significant increase in its stock price, gaining more than 26% this year alone. Liwag's price target increase by $25 to $415 suggests more than a 10% potential upside, reinforcing the positive sentiment around RBC Bearings' future. The strong growth was reflected in the recent fiscal performance where RBC demonstrated a year-over-year net sales increase of 10.6% for the fourth quarter and an impressive 14.1% growth for fiscal 2025. Additionally, the analyst highlighted solid results in aerospace and defense, particularly in sectors related to fixed-wing aircraft and guided munitions. With the expectation of further momentum, management indicates continued demand growth in fiscal 2026, forecasting increases in aerospace and defense sectors of at least 15% and mid-to-high single digits, respectively. Liwag also noted that RBC Bearings has improved its financial leverage by reducing debt levels significantly, enhanced by the strategic acquisition of Dodge Mechanical Power Transmission unit. This acquisition has been characterized as a substantial contributor to the company’s success, bringing in strong cash flow and opportunities for accretive mergers and acquisitions moving forward. RBC's ongoing strength is attributed to various factors, chief among them the synergies realized from the Dodge acquisition, suggesting a favorable outlook for the company's future performance that remains focused on solidifying its growth trajectory through strategic initiatives.