Aspen Aerogels: Margin Trough De-Risked Ahead of Revenue Inflection

Since our initiation of Aspen Aerogels, Inc. with a Strong Buy last June, we’ve seen the business

largely deliver on our identified levers despite ongoing macro headwinds. ASPN’s energy-industrial rev base proved more resilient vs Street skepticism, flattening at $146M in FY24 just inline with our call & providing a floor while insulation peers saw attrition. Meanwhile, validated customer wins in EV Thermal Barriers – extended awards from GM and fresh platforms with Mercedes-Benz & Volvo – have backfilled visibility towards the next volume ramp starting in late ’25, extending our conviction ’26 marks a step-function shift as topline growth & margin recovery return. Our ests now embed $420M rev for FY26, up 13% above cons, with dual-source execution in NA and China shielding ASPN from potential tariff drama while maintaining asset-light agility. With improved transparency into program ramps, and modest margin progression but lack of aggressive resets, we’re aligning valuation with EV/Sales at 2.1x, just below ASPN’s LT median but well above peer group to better reflect asymmetry between ASPN’s risk-managed supply chain and recovery pipeline. Cadence of OEM launches and global trade escalation remain risks, but cost discipline, flex capex load and clearer orderbook leaves higher floor under revenue & earnings vol vs a year ago. With Street still extrapolating near-term margin softness but oblivious to confirmed volume inflection just out of cons’ sight, we see opportunity to accumulate ahead of next leg up as execution & demand visibility