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Coverage Group:

Aerospace Supply

 

The Boeing Company (BA)

 

Hexcel Corporation (HXL)

 

Howmet Aerospace (HWM)

 

Note Tags:

 
 
737 MAX 777X Aircraft 787 Dreamliner A320neo Airbus Production Airlines Boeing Production Buzzing The Tower Commodity Nickel Company Face-Off COVID-19 Downgrade Report Downward Estimate Revision FAA Updates GE9x Initiation Report Jet Engine Demand LEAP Engine Market Intelligence Nickel-Based Alloys Russia Snapshot Report Stainless Steel Titanium Titanium Scrap Top Pick Upgrade Report Upward Estimate Revision

Aerospace Coverage Group:

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 October 17, 2021

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 September 29, 2021

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 September 24, 2021

Specialty Materials Coverage Group:

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 October 17, 2021

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 September 29, 2021

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 September 24, 2021

Steel Coverage Group:

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 October 17, 2021

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 September 29, 2021

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 September 24, 2021