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Titanium: Pricing Strength And The Risk Of Alloy Substitution

Titanium prices are expected to trend higher over the next few months as the global producers account for rising input costs (e.g., surcharge escalators) and leverage created by extended lead times. Today, we increased the benchmark pricing assumptions for CY23 which aligns with data collected from the channel and updated sponge cost outlook. The companies levered to the titanium market should eventually benefit from increased product pricing, reset contracts, favorable mix shift, increased shipments, ultimately leading to strong results next year. However, price elasticity may become a topic that emerges at some point this up-cycle, punctuated by reports of commercial aircraft redesigns. Continue reading

Chris D. Olin November 17, 2022 7:55 PM

Boeing Company (BA): Dreaming Of Catalysts – Raising Price Target On Long-Term Earnings Optimism

This looks like an interesting point for investors to get aggressive on the shares of The Boeing Company (BA), assuming reduced earnings visibility for the aerospace peer group has been fully discounted by The Street and positive trading catalysts are on the horizon. We updated the company model to account for the September commercial aircraft delivery update while incorporating some of the key data points highlighted in our industry note issued last week. We would be long BA shares heading into the 3Q22 earnings report and Investor Day scheduled for early November. Continue reading

Chris D. Olin October 11, 2022 2:30 AM

Aerospace: What Comes Down, Must Go Way Up Later? Updated Macro Outlook

We tried to account for the newly identified industry data points and unusual crosscurrent of positive/negative comments provided by aerospace bellwether company executives and high-level industry contacts. Bottomline, we see incremental downside to near-term market expectations on headwinds associated with commercial aircraft delivery delays, supply chain instability/bottlenecks, and shortage of jet engines. Yet, longer-term market confidence seems to be building and the corporate outlooks are moving in the opposite direction, providing support to peak aerospace market bullishness. This update: (1) provides readers a summary of changes made to the macromodel and reviews the main drivers behind the revised five-year aircraft delivery/production outlook for Boeing and Airbus; (2) alert readers to details embedded within production schedules recently issued by OEMs and General Electric (GE), with emphasis placed on the Dreamliner recovery strategy; and (3) concludes with highlights taken from a unique aero supplier survey that focused on contact opinions pertaining to current OEM believability and supply chain readiness. Continue reading

Chris D. Olin October 4, 2022 2:19 PM

The Boeing Company (BA): Storm Before The Calm – Lowering Estimates Ahead Of New Master Schedule

The Boeing Company (BA) model was updated to account for slightly weaker-than-expected commercial aircraft deliveries and expected changes to 737 build rate increase targets over the next 18-24 months. We now forecast reduced 2H22 earnings potential for 2H22 after applying slightly more conservative BCA segment assumptions. However, the updated CY23-24 estimates remain firmly above consensus. Aircraft delivery projections were essentially pushed to the right due to supply chain factors but underlying demand for next-generation jets does not appear to be waning. Our positive thesis many have been confirmed last week after industry contacts shared some of the details expected to be included in new master production schedules. Continue reading

Chris D. Olin September 20, 2022 6:26 AM

Tale Of The Tape: Carpenter Technology Versus Haynes International

Hello Fight Fans! Welcome to another “Tale of the Tape.” A unique report best described as another way for Tier4 Research to highlight areas of change, identified by proprietary channel checks, with a fresh look at the potential winners/losers selected from various peer groups. Today’s research undercard focuses on specialty materials, an underfollowed space exhibiting healthy trends and sequentially stronger survey data points. Do not be fooled. We are not talking about titanium, the product group that monopolized our research time and energy last month. This time we investigated the surprising nickel-based alloy market strength and bullish feedback offered by industry contacts in recent days. Companies within our coverage universe levered to upstream production seem ripe for outperformance and upward estimate revisions on robust demand/pricing undercurrents and incremental volume opportunities tied to PCC market share spillage. With that introduction out of the way, we are excited for the main bout which features two STRONG BUY rated contenders vying for the title of TOP PICK: Carpenter Technology (CRS) and Haynes International (HAYN). Continue reading

Chris D. Olin September 15, 2022 1:01 AM