Buy Rating Affirmed for Howmet Aerospace Amid Strong Market Performance and Positive Financial Outlook

Sheila Kahyaoglu, an analyst from Jefferies, maintained the Buy rating on Howmet Aerospace (HWM – Research Report). The associated price target was raised to $90.00.

Sheila Kahyaoglu’s rating is based on a comprehensive analysis of Howmet Aerospace’s operational and financial performance, alongside market conditions. Kahyaoglu’s optimism is fueled by Howmet’s ability to achieve a net price increase and to continuously gain market share, demonstrating the company’s resilience and disproving any concerns about its dependence on a single product as it adjusts to the reduced production of the MAX jet. Additionally, upward revisions in revenue, profit, and free cash flow forecasts—3%, 7%, and 9% respectively—coupled with an increase in the forward-year price-to-earnings ratio, underscore the company’s positive outlook. Kahyaoglu’s projections also factor in robust incrementals and an abundance of cash available for strategic deployment, leading to a significant price target increase to $90.

The report’s confidence in Howmet Aerospace is further bolstered by a raised revenue forecast despite a decrease in MAX jet production rates, indicating strong performance in other segments such as Defense, Industrial, and Wheels. Moreover, the company’s impressive margin improvements, with Q1 incrementals outpacing prior quarters, signify operational leverage and efficiency gains. Howmet Aerospace’s free cash flow generation in what is typically a cash use quarter, combined with a boost to the 2024 free cash flow guidance, signals a strong financial position. The report also highlights the company’s investment-grade balance sheet, which allows for further shareholder returns through increased dividends and share repurchases. This holistic view of the company’s strategic positioning and financial health leads Kahyaoglu to affirm a Buy rating for Howmet Aerospace.

In another report released today, Barclays also maintained a Buy rating on the stock with a $85.00 price target.

Based on the recent corporate insider activity of 36 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of HWM in relation to earlier this year.

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Howmet Aerospace (HWM) Company Description:

Howmet Aerospace manufactures advanced engineered solutions tailored for the aerospace, defense, and transportation sectors. It focuses on jet engine components, aerospace fastening systems, and airframe structural components. The company also manufactures forged aluminum wheels for commercial transportation.