• RBC Capital analyst Ken Herbert initiated coverage on several Aerospace & Defense companies.

• Boeing Co (NYSE: BA) initiated with an Outperform rating and a price target of 5, implying an upside of 27%.

• The analyst sees the shares being at an "attractive entry point from a cyclical perspective." An expected 2022-2023 inventory draw-down will provide positive free cash flow momentum, says Herbert, who sees normalized FCF at about $15 per share.

• AAR Corp. (NYSE: AIR) initiated with an Outperform rating and a price target of , implying an upside of 30%. Herbert sees the company being poised to benefit from the recovery in the commercial aerospace aftermarket and believes that continued execution improvement will support positive investor sentiment.

• Ducommun Inc (NYSE: DCO) was initiated with an Outperform rating and a price target of , implying an upside of 26%. The analyst says the company is well-positioned for further margin expansion as volumes improve in the commercial aerospace market, with the commercial aerospace ramp expected in 2022-2025 likely to offset slower defense growth.

• Kratos Defense & Security Solutions, Inc (NASDAQ: KTOS) initiated with an Outperform rating and a price target of , implying an upside of 22%, calling the stock a "core small-cap holding for exposure to the U.S. defense market."

• Hexcel Corp (NYSE: HXL) initiated with a Sector Perform rating and a price target of , implying an upside of 12%. The analyst is optimistic on the expected 2022 growth from commercial aero but also warns that a slower ramp on the A350 and 787 will be a headwind for the sentiment.

• Mercury Systems Inc (NASDAQ: MRCY) initiated with a Sector Perform rating and a price target of , implying an upside of 3%. The analyst states that investors are taking a cautious approach to modeling a return to the high-single-digit organic growth outlook for the company, and the recent deceleration in its growth and strategic re-focus justify patience.

• AeroVironment, Inc. (NASDAQ: AVAV) initiated with a Sector Perform rating and a price target of , implying an upside of 3%. Herbert says that while concerns with the change in competitive landscape and defense budget are overdone, he also sees flat margins for FY22-23 and fewer top-line upside opportunities.

• Heico Corp (NYSE: HEI) initiated with a Sector Perform rating and a price target of 5, implying an upside of 3%.

• The analyst states the company is well-positioned for above-industry secular growth post-crisis in its aviation business, with potential catalysts coming from its M&A activity, but its margin profile is "well understood" by investors while its current multiple already reflects its near term upside.

• VSE Corp (NASDAQ: VSEC) initiated with an Outperform rating and a price target of $60, implying an upside of 22%.

• The analyst says while recent contract wins and acquisitions will support strong growth in the Aviation segment, VSE's exposure to business jets also gives it "diversification and upside."

• TransDigm Group Inc (NYSE: TDG) initiated with an Outperform rating and a price target of 0, implying an upside of 7%. The analyst, who forecasts TransDigm will see about 20% growth in its commercial aftermarket business in FY22, contends that the stock offers investors exposure to the commercial aftermarket recovery with "significant margin expansion and capital allocation optionality."

• Spirit AeroSystems Holdings, Inc. (NYSE: SPR) initiated with an Outperform rating and a price target of , implying an upside of 41%.

• Herbert mentions the stock represents an attractive way to recover in commercial aerospace, with potential upside coming from its outlook for 2022 free cash flows.

• Price Action: BA shares are trading higher by 0.07% at $214.5 on the last check Friday.

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