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Welcome To Tier4 Research:

Daily Trade - Winners/Losers:

Top Aerospace Movers - Trading Higher:

  • lha€6.01+0.26+4.52%
  • af€4.21+0.18+4.47%
  • tgi$20.19+0.66+3.38%
  • iag£182.92+5.76+3.25%
  • air$33.84+0.9+2.73%

 

Top Aerospace Movers - Trading Lower:

  • maxr$29.57-0.66-2.18%
  • luv$50.36-1.15-2.23%
  • b$42.04-0.97-2.26%
  • bab£341.5-11.4-3.23%
  • spce$20.01-4.05-16.83%

 

Top Metal Movers - Trading Higher:

  • aa$56+7.4+15.23%
  • usap$9.92+0.75+8.18%
  • cenx$17.25+1.14+7.08%
  • era€83.35+4.75+6.04%
  • fcx$38.64+1.51+4.07%

 

Top Metal Movers - Trading Lower:

  • rio£5038-73-1.43%
  • x$22.11-0.33-1.47%
  • lb$757.8-14.2-1.84%
  • jcq€20.9-0.4-1.88%
  • ng$5.24-0.186-3.43%

 

Individual Company Coverage:

Chris D. Olin

Buzzing The Tower: Mid-October Update

Tower… Requesting permission to release Buzzing The Tower… Proceed with caution. Those words came to mind after we completed full review of proprietary research, survey quotes, industry data points, and macro headlines. The monthly index score hit a CY21 low point, which could be interpreted as a negative NT leading indicator for our coverage group and peers. Shoot, now it looks like we are in trouble with Viper after today’s unauthorized fly-by. The anger index is almost bright red – another way for us to communicate the negative catalysts looming over the aero supply chain and materials group. Against this backdrop, Haynes International (HAYN) looks like the best-positioned name (considering overlap with favorable data points), while Carpenter Tech (CRS) is at the bottom of the list. Continue reading

Chris D. Olin

Hexcel Corporation (HX): Downgrading Shares To Outperform On Reduced Near-Term Earnings Visibility

Hexcel Corporation is one of the companies positioned within the aerospace supply channel with elevated exposure to the market headwinds we highlighted in prior notes, including a destabilized 787 aircraft program (following a pullback in monthly build rates) and volume disruptions associated with extended military production bottlenecks. This morning, we lowered estimates on HXL to fully discount a delayed sales recovery risk or weaker-than-expected shipments to key customers like Boeing and Lockheed Martin. With respect to the limited near-term earnings visibility, we also downgraded the shares to OUTPERFORM (versus Strong Buy). Continue reading

Chris D. Olin

Carpenter Technology (CRS): The Inflection Point May Still Be Two Quarters Away – Lowering CY22 Estimates

We are lowering estimates for Carpenter Technology (CRS) once again to better align with the potential risks highlighted in a report published last week (BA787 and military/defense) and to discount the impact from a delayed ramp in premium alloy mill demand. Additional analysis suggests the company may be 1-2 quarters away from realizing any benefits (or positive EPS results) associated with improving jet engine orders and/or commercial aircraft build rates. Moreover, CRS may have slightly more exposure to any negative direct/indirect events tied to the coronavirus variant outbreak, semiconductor chip shortage, and Boeing 787 program instability (versus the peer group). Continue reading

Chris D. Olin

The Boeing Company (BA): Updated Scenario Analysis Based On Existing Commercial Aircraft Production Schedules

We updated The Boeing Company (BA) model to align with expected commercial aircraft deliveries and future production changes. Revised assumptions for the BCA segment resulted in a slightly lower earnings outlook for this year and CY22, with the primary negatives related to the 737 and 787 aircraft programs. Downward adjustments aside, we still believe the BA shares are attractively valued today, especially after completing our EPS upside analysis. Bottom-line, the core portfolio earnings power strengthens considerably (and the FCF generation) if the company can realize those aggressive aircraft production targets embedded in the latest schedules shared with the global supply chain. Continue reading

Chris D. Olin

Tale of the Tape: General Electric Versus Rolls-Royce

A pre-fight company comparison between General Electric (GE) and Roll-Royce (RR), including global market analysis supported by the release of new industry data points, collection of channel insights, and future commercial aircraft build rates confirmed our underlying view regarding the relative strength in GE/CFM demand and the aircraft/engine programs driving the optimistic production and aftermarket services outlook. While Rolls-Royce recently issued multi-year jet engine production schedules to their global suppliers that included downward revisions, the GE procurement team seems to be reiterating optimism and upward bias to CY22-23 expectations. We still expect the aggressive production outlook to culminate into a surge in parts and materials sourcing. Continue reading