Allegheny Technologies (ATI): Raising Estimates On Projected Aerospace Demand Strength; New LEAP Outlook

By Chris D. Olin Published on July 13, 2021 at 8:49 AM

We are increasing Allegheny Technologies (ATI) estimates to account for an increasingly favorable commercial aerospace sales outlook, better-than-expected specialty materials survey results and upward movement in product pricing. After adjusting for the new production schedules shared by jet engine manufacturers and rising single-aisle aircraft build rate assumptions, the company appears to be on-track to generate $1.05-1.10/share of earnings by CY23 on stronger mill volumes and favorable premium forge sales contribution. Continue reading

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

By Chris D. Olin Published on June 4, 2021 at 8:28 AM

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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