Orbital ATK, Inc. (NYSE: OA) has an upcoming investor presentation this week at the Jefferies Industrials Conference. It seems that one other analyst thinks there is value here now that the Orbital-Alliant merger and break-up has been completed. The independent research firm Argus has raised its rating to Buy from Hold.

If Argus is right, Apple could have a total return opportunity of about 23% if you include the dividend. Orbital ATK’s price target was put at $95.00 in the Argus upgrade.

Argus noted that Orbital ATK is a new company created through the merger of Orbital Sciences and the aerospace and defense groups of Alliant Techsystems. It was also noted that the stock has outperformed over the past quarter with a gain of over 4% versus a drop of 1.7% for the S&P 500, and that its shares have gained 25% or so since it started trading on its own earlier this year.

Still, what matters more than past performance is what lies ahead…

Argus said that the earnings trajectory for Orbital ATK is promising relative to its peers. The company’s valuations also appear attractive here. Even at $95.00, Orbital ATK would be valued at 17.3 times next year’s earnings. That is close to the industry average and does not factor in any potential earnings upside that may juice valuations.

Orbital ATK has three primary segments: Flight Systems (35% of sales); Defense Systems (29%); and Space Systems (27%). The most profitable segment in the second quarter was the Flight Systems, with sales growing there in that unit by over 8% to $398 million.

Space Systems saw sales rise almost 17% to $310.1 million, with a 13.4% operating margin. The company attributed that growth to better sales in its Civil and Defense Division and the Commercial Satellites Division.

In the Defense Systems segment, Orbital ATK’s sales were down by less than 1% to $440 million. This was shown to be from lower sales in the Small Caliber Systems business, with its operating margin falling to 10.1% from 10.4% a year earlier.

Argus sees higher buybacks and better dividends ahead. The firm said:

The combined company had cash and cash equivalents of $50 million and total debt of $1.59 billion at the end of the second quarter. The total debt/total capital ratio was 46%… The board expanded its authorized repurchase program to $100 million from $75 million through the remainder of 2015… management noted that it expects a 10% reduction in the share count over the next three years. The company pays a quarterly cash dividend of $0.26 per share, or $1.04 annually, for a yield of about 1.5%. Our dividend forecasts are $1.04 for 2015 and $1.20 for 2016.

Orbital ATK shares were down with a weak market on Tuesday, and this upside target is more or less in-line with other analyst estimates. Its stock was down 15 at $78.10 in late-afternoon trading and the consensus price target is closer to $96.00 as of last look.

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