Loar Holdings (LOAR) is expected to gain in Q3 from strong Aerospace & Defense fundamentals, scarcity value, and a positive M&A landscape, RBC Capital Markets said in a report emailed Tuesday.

Loar will report its Q3 earnings on Wednesday, RBC said. "We expect the company to exceed 3Q24 expectations, but we expect any commentary on 2025 to be cautious, and considering the recent stock strength, we do not believe the [Q3] results will be a strong, positive catalyst," it added.

RBC's model estimates about 19% total revenue growth for Q3, with 11% organic growth driven by roughly 13% in business jet markets. The brokerage is optimistic about the segment's outlook, particularly with the potential for improvement under a potential Trump presidency.

RBC does not believe that Loar's performance has been hampered by a more stringent M&A regulatory process under the Biden administration. However, the firm expects M&A activity in the Aerospace & Defense sector to pick up into 2025. RBC sees potential upside from the company's acquisition of Applied Avionics.

"We believe the outlook for business jet will improve under a Trump presidency, and considering bizjet [original equipment manufacturer] services growth of [nearly] 16% in 3Q24, we view the elevated bizjet exposure for Loar as a positive," according to the note.

For Q3, RBC projects Loar's sales to reach $98.1 million, exceeding the $96.5 million consensus, with adjusted diluted EPS in line with consensus at $0.13.

RBC maintained an outperform rating on Loar and raised its price target to $100 from $80.

Shares of Loar were down 1.6% in recent Tuesday trading.

Price: 87.84, Change: -1.47, Percent Change: -1.65