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On Monday, Bernstein analysts upheld their Outperform rating on shares of Howmet Aerospace Inc. (NYSE:HWM (BMV:HWM)), along with a steady price target of $138.00. The stock, currently trading at $113.63, has demonstrated remarkable strength with a 103% return over the past year.
According to InvestingPro analysis, the company boasts a perfect Piotroski Score of 9, indicating exceptional financial strength. The firm's analysts emphasized Howmet Aerospace's promising position within the commercial aerospace sector, highlighting the company's growth in aftermarket revenues and its increasing role as a practically sole source for high-pressure turbine (HPT) blades.
Howmet Aerospace, traditionally viewed as an original equipment (OE) stock, is experiencing a shift as it capitalizes on the aftermarket for legacy engines like the CFM56 and V2500. These engines are seeing extended service life due to Airbus and Boeing (NYSE:BA) not meeting market demand. Bernstein analysts noted that this trend is contributing to Howmet's growth.
Mooreover, the demand for HPT blades is surging as the LEAP and GTF engines operate at higher temperatures and pressures, leading to shorter blade lifespans. Howmet Aerospace's technological and automation advantages position it as a nearly exclusive provider in this space, which is still in the early stages of growth.
Looking ahead, Bernstein expects Howmet Aerospace to benefit from positive catalysts on both the OE and aftermarket fronts within the commercial aerospace industry. The firm forecasts a compound annual growth rate (CAGR) of 11% in revenues from 2024 to 2028 for Howmet, with an even more robust 17% CAGR anticipated for segment income growth during the same period, as profit margins are projected to widen. This outlook aligns with the company's current momentum, as InvestingPro data shows revenue growth of 13.2% and a strong financial health score of 3.15 out of 5.
In their analysis, Bernstein analysts reiterated their view that the market has yet to fully recognize Howmet Aerospace's strong outlook, a sentiment they have maintained since initiating coverage in January 2024. The analysts project that Howmet's unique market position and technological edge will drive its financial performance and justify its high multiple in the coming years.
With analyst targets ranging from $81 to $144 and a consensus recommendation of 1.58 (Strong Buy), the stock's potential remains strong despite trading above its InvestingPro calculated Fair Value. Investors seeking deeper insights can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers, which includes detailed analysis of Howmet's valuation metrics and growth prospects.
In other recent news, Howmet Aerospace has been the subject of multiple analyst updates following its strong third-quarter earnings. The company's adjusted earnings of $0.71 per share exceeded the consensus estimate of $0.65, and its revenue rose by 11% year-over-year to $1.84 billion. These positive results led to an upward revision of Howmet's full-year outlook, with earnings guidance now ranging between $2.65 and $2.67 per share and annual revenue expectations between $7.39 billion and $7.43 billion.
BofA Securities and Baird have both responded positively to these developments, increasing their price targets for Howmet Aerospace to $135 and $144 respectively.
These updates reflect recent developments in Howmet Aerospace's performance and future prospects, particularly in its Industrial segment and the Commercial Aerospace sector. The company's strong positioning as a top supplier of Industrial Gas Turbines and its robust growth in the commercial aerospace segment have been highlighted as key factors in its future growth trajectory.
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