VSE Corp. (NASDAQ:VSEC) shares dropped nearly 7% on Thursday after the company reported its Q4 results, with EPS coming in at $0.68, worse than the Street estimate of $0.75. Revenue was $234.3 million, missing the Street estimate of $237.8 million.

According to the analysts at RBC Capital, the Fed/Defense business was the primary headwind, while results in the Aviation and Fleet segments were encouraging.

The analysts believe the stock reaction was overdone, but the 2023 free cash flow, leverage and portfolio outlook will limit near-term upside. The analysts think the aviation assets will eventually drive multiple expansions, but they reiterate their Sector Perform rating and $50 price target.