11:52 AM EST, 02/04/2025 (MT Newswires) -- RBC Bearings ( RBC ) offers an "attractive" growth and margin expansion potential, given its management's strong execution and expectations of continued healthy demand for its aerospace and defense products, Morgan Stanley said in a Tuesday note.

The company reported fiscal Q3 adjusted earnings Friday of $2.34 per diluted share, up from $1.85 a year earlier, as net sales rose to $394.4 million from $373.9 million. Morgan Stanley noted that RBC's industrial business returned to growth during the quarter, while aerospace and defense sales rose year over year.

According to the investment firm, synergies between RBC and Dodge also contributed to the quarter's adjusted EBITDA margin of about 31%. Morgan Stanley said RBC's acquisition of Dodge in 2021 still provides strong cash flow generation, a recurring industrial business, and improved manufacturing technology.

"Given RBC's improved leverage, we continue to see the potential for accretive M&A following its successful acquisition and integration of Dodge," Morgan Stanley added.

Morgan Stanley raised its target price on RBC Bearings ( RBC ) stock to $390 from $360, while maintaining its overweight rating.

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