Karman Holdings (KRMN) has gone on the offensive to address a long list of concerns, and investors are likely to wait for Q3 results as a "clearing event," RBC Capital Markets said Sunday in a report.

Karman's recent disclosures on margins, growth, acquisitions and working-capital efficiency are constructive, and the company is the best-positioned supplier in high-priority defense markets such as missiles, missile defense, space, hypersonics and maritime, RBC said.

Concerns about second-sourcing and pricing pressure are overdone given the urgency to increase output across these programs, and Karman's post-IPO acquisitions are broadly in line with its roughly 30% margin profile, the report said.

Karman shares have slumped this year amid abrupt management and auditor changes, short-seller reports, mixed messages on organic growth and a murky free-cash-flow outlook, RBC said. Recent stock weakness reflects investor caution ahead of US midterm elections and persistent concerns about cash generation, even as management guides to positive FCF in the H2, the report said.

Q3 results are expected Nov. 5.

RBC cut its price target on Karman stock to $70 from $85 and maintained its outperform rating.

Price: 33.97, Change: -1.72, Percent Change: -4.82