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Specialty Materials: A Tale Of Two Alloys – A Review Of Quarterly Survey Results And Market Trends

We collected several data points throughout the specialty materials survey process but could not confidently identify a main theme for this update report. Channel crosscurrents, a less-aggressive aerospace outlook, and modest erosion in contact sentiment could be interpreted as mixed-to-negative indicators for the entire peer group heading into the 4Q earnings period. We are not expecting many companies within our coverage universe to meet/beat near-term expectations, but there are still a few names worth holding through any period of market turbulence, including the upstream alloy producers that appear to be positioned to take market share in CY22. Continue reading

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4:37 AM

Aerospace: Updating Our Macro Assumptions Ahead Of New Industry Catalysts

After taking a closer look at aerospace market drivers, listening to the commentary provided by OEMs and Tier-1 suppliers, and collecting early market intel from proprietary survey-work, we remain comfortable with the bullish outlook applied the coverage group. We anticipate the realization of accelerated aero-related sales growth in CY22 for companies levered to aluminum, composite materials, specialty materials, and forging services driven by unit volume strength, better pricing/mix, and distribution channel refill. In today’ s market update, We lowered the CY22 earnings outlook for Hexcel (HXL) to account lost 787 revenues in 1H22. Continue reading

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5:39 AM

Aerospace: Upgrading Upstream Suppliers On Stronger Aero Sales Outlook And Potential Bottleneck Benefits

We are making a rotational call within the aerospace coverage group, now favoring upstream suppliers that appear to be positioned to benefit from a changing commercial aircraft production environment. The investor narrative may shift to the premium forgers and/or specialty materials providers earlier-than-expected as the supply chain readies for a sharp inflection in demand for 737MAX or A320neo applications, looking beyond negative near-term earnings expectations. As such, we are changing ratings on a few companies that fit into that description. Today, we are formally upgrading Hexcel Corporation (HXL) and Haynes International (HAYN) to Strong Buy investment ratings and moving Allegheny Technologies (ATI) over to Outperform. We had previously rated all three Hold. Continue reading

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8:28 AM
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