JPMorgan initiates Graham stock with Overweight on defense growth

JPMorgan has initiated coverage on Graham Corporation (NYSE:GHM) with an Overweight rating and a price target of $120.00, despite the shares currently trading at $86.90 and suggesting possible overvaluation. Graham designs and manufactures mission-critical technologies for Defense, Space, and Energy & Process markets, with Defense revenue increasing to around 60% of fiscal year 2026 revenue.

Analyst Tomohiko Sano highlights the company's sole sourcing of Navy content and advanced vacuum technologies. JPMorgan anticipates double-digit top-line and mid-20s adjusted EBITDA growth through fiscal year 2028, citing strong momentum with 21% revenue growth over the past year. The December 2027 target implies a 38% upside. Despite strong Q1 2027 earnings exceeding expectations, Graham's stock experienced a slight decline due to margin pressures and maintaining full-year guidance, with a record backlog of $557 million.