SpaceX supplier's defense and space bets signal growth despite stock dip

Applied Aerospace & Defense, a defense and space supplier that went public in June, is trading below its IPO price after a reported quarterly loss, despite strong underlying growth and strategic partnerships with SpaceX and Anduril. The company's $154 million second-quarter loss was driven by $110 million in nonrecurring, noncash IPO-related charges, masking record adjusted EBITDA of $36.4 million, up 38.5% year over year. About 87% of its revenue comes from sole-source contracts, and it supplies components for Anduril's Fury aircraft and SpaceX's Falcon 9 landing gear. The stock trades at a discount to peers like TransDigm and HEICO, with analysts' average price target of $25.75, more than double its current price. The company has 40% excess capacity and reduced its debt to 2.5x adjusted EBITDA post-IPO, though investors should monitor its unbilled receivables, which recently rose to 34% of sales.