Updated Aug 7 at 11:19am ET.
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RBC Capital raised its price target for the stock to $350 from $325. This move suggests the firm sees about 23 percent more room for the stock to grow from its current price.
The change comes just after the company reported a 24 percent jump in quarterly revenue. Analysts often adjust their targets after earnings to reflect new data on how much cash a business is generating and how fast its markets, like commercial aerospace, are growing.
Source: RBC Capital
Howmet reported a strong quarter with revenue of $2.55 billion, which was about 24 percent higher than the same time last year. The company earned $1.33 per share, topping the $1.24 that analysts expected. This growth was driven by high demand for the complex engine parts and fasteners that aircraft makers need to clear their large backlogs of orders.
Profitability also improved, with operating margins, the percentage of sales left after paying for production, reaching nearly 28 percent. The company is using its extra cash to buy back $300 million of its own shares, which reduces the total number of shares and makes each remaining one more valuable. Because the business is performing better than planned, management raised its financial targets for the rest of the year.
The board of directors declared a dividend of 14 cents per share for the current quarter. This payment is part of the company's regular schedule of returning cash to shareholders. While the dividend is a steady feature, the real value for owners remains the company's ability to produce high-tech engine parts that aircraft makers cannot easily source elsewhere.
Source: PRNewsWire
Howmet is seeing a surge in demand for its specialized metal parts used in industrial gas turbines. These turbines are increasingly used to generate on-site electricity for data centers, which require massive amounts of power to run AI software.
This creates a second path for growth alongside the company's main business of selling parts for jet engines. Having two different industries rely on its complex casting and metallurgy makes the business less dependent on the ups and downs of the airline industry alone.
Source: Investors Business Daily
Analysts at Jefferies raised their price target for the company by about 6 percent. This move reflects confidence that the company can continue to earn high profits as aircraft manufacturers work through a long backlog of plane orders. Even with the stock trading at a high price, the firm believes the company's technical lead in making engine components justifies a higher valuation.
Source: Jefferies
Analysts have steadily raised their price targets for this stock throughout the year. Most analysts rate it a buy, and the average target of $304 suggests a 7% gain from the current price.
The company has cleared the analyst bar for eight straight quarters. Management consistently sets targets they can beat, and the business is currently outrunning even bullish forecasts.
Seeking Alpha · Opinion · Aug 6
PRNewsWire · Press release · Aug 6
PRNewsWire · Press release · Jul 27
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