Wedbush Securities upgraded its rating on shares of Goodrich Corp. (NYSE: GR) to outperform from neutral based largely on outperformance in the commercial aftermarket. The brokerage also raised its price target on shares of the U.S. aircraft parts supplier to $100 from $92.

Our latest proprietary research gives us confidence that the commercial aftermarket recovery is not likely to be derailed by rising fuel prices. Clearly, rising oil prices and macro concerns have trimmed airlines 2011 capacity growth, but we now believe Goodrich’s 2011 aftermarket growth will be in the 13 percent range, as compared to company guidance of up 8 percent, said Kenneth Herbert, an analyst at Wedbush Securities.

Herbert estimates that the commercial aftermarket accounts for about 62 percent of Goodrich’s total operating profits, making it the key swing factor for the firm. While there is still substantial risk that if oil reaches over $125 a barrel, or for any reason the airlines get much more cautious on travel demand or macro outlook, he could well see further reductions in the planned capacity growth than he has yet seen announced.

However, Herbert believes the chances of a significant step back in the aftermarket growth this year are remote, based largely on his proprietary work; and as such he sees now as an attractive entry point for Goodrich.

Herbert believes Goodrich will report a beat when it reports its first quarter of 2011 results on April 21. However, he believes any raise to guidance at this time will largely reflect the Microtecnica acquisition, as he does not yet believe the company will have seen enough in either the aftermarket or the commercial original equipment market to justify another raise to guidance this early in the year and with still so much uncertainty in the marketplace.

However, he believes the company will be able to point to a very strong commercial original equipment backlog, with volumes trending better as well as a still strong commercial aftermarket. Herbert expects investors to react well to the first quarter results. However, he is not just recommending the shares as a call on the quarter, he believes the recent 10 percent underperformance of the stock is not justified and given his renewed confidence in the commercial aftermarket, he views Goodrich as a core holding for the aerospace cycle.

We remain cautious on Goodrich’s ability to 'outgrow' the broader defense market with its ISR focus, but we do not believe any defense headwinds will derail the stock and the commercial recovery. While not as meaningful from a margin standpoint, however, we believe Goodrich is clearly well positioned to benefit as original equipment volumes accelerate. Relative to our universe, Goodrich has a much greater original equipment exposure to Airbus, which is also a net positive, said Herbert.

Goodrich will continue to benefit from cost reduction and lean initiatives. Herbert estimates the company has reduced its fixed cost base by over 20 percent since 2002. Moreover, recent acquisitions provide substantial revenue and margin opportunity across the cycle as well.

Herbert continues to see peak EPS for Goodrich of about $9.00 in 2014/2015, with operating margins improving to almost 20 percent across the cycle.

The brokerage raised its 2011 EPS estimate for Goodrich to $5.55 on revenue of $7.844 billion from $5.36 on revenue of $7.702 billion, and its 2012 estimate to $6.40 on revenue of $8.774 billion from $6.06 on revenue of $8.588 billion.

Goodrich stock is trading up 1.88 percent at $85.81 on the NYSE at 9:42 am EDT.