On Friday, Baird adjusted its outlook on Howmet Aerospace Inc. (NYSE:HWM (BMV:HWM)) shares, citing robust growth prospects in the aerospace sector. The firm increased the price target to $84 from the previous $74, while maintaining an Outperform rating on the stock.
The upgraded price target reflects Baird's confidence in Howmet Aerospace's sustained growth, driven by its involvement in the Commercial Aerospace industry and a solid Defense portfolio.
The analyst pointed to the company's momentum in Narrowbody aircraft production, which is expected to contribute to a gradual increase in margins for Engine products, despite challenges faced by Boeing (NYSE:BA).
Additionally, the report highlighted Howmet Aerospace's performance in the Fastening Systems segment, where margins expanded by 510 basis points in the first quarter of 2024. This improvement was attributed to steady advancements on the 787 and A350 platforms.
The firm's positive outlook is also bolstered by raised guidance for 2024, reflecting favorable revenue growth across its Commercial Aerospace and Defense segments. Notably, the Commercial Transportation sector has performed better than anticipated in the first half of 2024.
Following these developments, Baird has revised its earnings per share (EPS) estimates for Howmet Aerospace for the years 2024 and 2025 to $2.39 and $2.95, respectively. The new price target of $84 represents Baird's confidence in the company's financial trajectory and market position.
InvestingPro Insights
Baird's optimistic revision of Howmet Aerospace's price target is underpinned by several key metrics and InvestingPro Tips that investors might find compelling. The company has seen a significant return over the last week with a 16.11% price total return, and an even more robust 73.11% return over the past year, reflecting strong market confidence. This aligns with Baird's positive sentiment on Howmet's growth prospects.
InvestingPro Tips suggest that Howmet has raised its dividend for three consecutive years, indicating a commitment to returning value to shareholders. Moreover, with a PEG Ratio of just 0.55 for the last twelve months as of Q1 2024, the company's growth rate appears to be at a discount relative to its earnings growth, which may attract value investors looking for growth at a reasonable price.
For a deeper dive into Howmet Aerospace's performance and for additional InvestingPro Tips, investors can explore https://www.investing.com/pro/HWM. Currently, there are 19 more InvestingPro Tips available, which could provide further insights into the company's financial health and stock performance. To gain full access to these insights, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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