Ducommun (DCO) Stock Forecast & Price Target

Ducommun is supported by strong fundamental momentum from 2Q26, where revenue grew 12%, gross margins reached 28%, and adj. EBITDA margins improved to 16.9% on strong execution and mix. Its outlook is reinforced by 68% growth in missiles/munitions, a 1.4x book-to-bill in Military and Space, and a $707M military and space backlog at the end of 2025, while commercial aerospace should benefit as Boeing 737 MAX destocking eases. Management’s long-term margin path toward about 18% in 2027, plus continued growth in the higher-quality Engineered Products portfolio and a cleaner balance sheet with net leverage modeled around 1.3x, supports a positive view.

Ducommun is viewed cautiously because much of the upside from missile and munition ramps, defense electronics growth, and the commercial aero recovery appears already reflected in valuation, while legacy defense programs could face pressure amid FY27-FY28 budget uncertainty. The company’s thesis also depends on continued working-capital release and near-100% FCF conversion in 2026E-2028E, but that could slip if commercial aero build rates stumble or incremental investment rises to support the ramp. On top of that, M&A is hard to underwrite because no acquisitions have occurred since BLR Aerospace in 2023 and competition plus high valuations constrain timing, leaving downside if revenues only reach about $970M in 2028 with 17% adjusted EBITDA margins.