On Thursday, Bernstein reaffirmed its positive stance on shares of Howmet Aerospace Inc. (NYSE:HWM (BMV:HWM)), maintaining an Outperform rating and a price target of $138.00. Currently trading at $107.69, the stock has shown remarkable strength with a 99.59% gain year-to-date.
The firm updated its model for Howmet, noting modest delays in the growth projections for the company's Engine Products and Fastening Systems divisions. Despite the revised growth path, Bernstein remains optimistic about Howmet's future performance, aligning with the broader analyst consensus that remains strongly bullish. According to InvestingPro, the company maintains a perfect Piotroski Score of 9, indicating exceptional financial strength.
The analyst at Bernstein has adjusted the 2025 adjusted earnings per share (EPS) estimate to $3.45, down from the previous $3.58, due to the anticipated slower growth. Nonetheless, the firm's expectations for Howmet's revenues, EPS, and free cash flow in 2025 and 2026 remain higher than the consensus.
InvestingPro data reveals that 14 analysts have recently revised their earnings estimates upward, suggesting growing confidence in the company's prospects. The company's overall financial health score is rated as GREAT, with particularly strong profitability metrics.
In the Engine Products sector, Bernstein predicts that growth in revenues and margins will occur slightly later than previously estimated. This growth is expected to be driven by increasing demand in the aftermarket and the transition to higher-priced next-generation blades for the LEAP-1A, LEAP-1B, and GTF engines.
However, the analyst anticipates a flatter outlook for original equipment (OE) deliveries of current-generation blades in 2025, with a gradual recovery in 737MAX production and a slow ramp-up for the 787 program.
Despite the delays, growth for both the 737MAX and 787 programs is expected to accelerate in the latter half of 2025. The delivery of new-generation blades for the LEAP-1A has already commenced in 2024, but the ramp-up for new-generation blades for the GTF and LEAP-1B is not likely to begin until 2026.
Consequently, Bernstein has shifted its growth timing expectations for Howmet Aerospace accordingly. For deeper insights into Howmet's valuation and growth prospects, investors can access the comprehensive Pro Research Report available on InvestingPro, which includes detailed analysis of the company's financial health, valuation metrics, and growth potential.
In other recent news, Howmet Aerospace's third-quarter earnings surpassed analyst expectations, triggering an upward revision of its full-year outlook. The company reported adjusted earnings of $0.71 per share, exceeding the consensus estimate of $0.65.
Moreover, revenue rose by 11% year-over-year to $1.84 billion. A significant contribution to this growth came from Howmet's commercial aerospace segment, which saw a 17% revenue increase compared to the same period last year.
BofA Securities and Baird have both responded positively to these developments. BofA Securities increased its price target for Howmet Aerospace from $100 to $135, maintaining its Buy rating on the stock. The firm noted Howmet's strong performance in the Industrial segment, particularly in Oil & Gas and Industrial Gas Turbines (IGT).
Similarly, Baird raised its price target for Howmet Aerospace from $113 to $144, maintaining its Outperform rating. The firm emphasized Howmet's robust growth in the commercial aerospace sector and its leading position as an original equipment manufacturer (OEM).
Looking forward, Howmet Aerospace has adjusted its full-year earnings guidance to a range of $2.65 to $2.67 per share, exceeding the previous forecast and the $2.59 consensus. The company also adjusted its annual revenue expectations to fall between $7.39 billion and $7.43 billion.
According to CEO John Plant, robust demand in commercial aerospace, driven by healthy air traffic growth and significant needs for engine spare parts, is anticipated to drive approximately 7.5% year-over-year revenue growth in 2025.
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