Specialty Materials: Highlights From Quarterly Channel Checks

By Chris D. Olin Published on July 16, 2021 at 5:06 AM

Despite recent negative headlines regarding a disruption in 787 aircraft production, we are sticking with a bullish thesis on the specialty materials group following a review of better-than-expected quarterly survey results. Communications with industry contacts confirmed much stronger demand/pricing trends in 2Q21, improving channel sentiment and upward forecast revisions, approaching catalysts, and more manageable inventory situations. Key data points collected over the past few months suggest there is an upward bias to consensus forecasts (looking out 3-4 quarters), with emphasis placed on companies levered to jet engine OEM demand and the premium alloy product categories (nickel-based alloys, cobalt-alloys, and specialty stainless steel). Continue reading

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Carpenter Technology (CRS): Initiating Coverage With A Strong Buy; This Is Our New Top Pick

By Chris D. Olin Published on July 6, 2021 at 11:47 AM

We are initiating coverage on Carpenter Technology (CRS) with a Strong Buy investment rating and $50/share target price. Following a short period of trading weakness, we are comfortable with the lower entry point. The shares look undervalued today, especially after the consideration of better-than-expected survey results and backdrop of macroeconomic strength, rebounding channel sentiment, commodity nickel price inflation and enhanced commercial aero demand visibility. Market intelligence suggests the specialty materials group is at or near a summer inflection point which should be followed by a multi-year period of above-average top-line growth. Continue reading

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Allegheny Tech (ATI): Stainless and Premium Alloy Strength Sets Specialty Materials Group Apart From Metals Pack

By Chris D. Olin Published on June 18, 2021 at 10:04 AM

This is no time to panic! We are sticking with bullish investment ratings on certain names from the specialty materials group despite recent downward metals and mining trading pressure. Companies like Allegheny Technologies (ATI) and Haynes International (HAYN) should benefit from strengthening top-line drivers throughout 2H21 and CY22. Continue reading

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