Analyst John Eade Raises Price Target for Howmet Aerospace by 20%

Argus Research's John Eade raised their price target on Howmet Aerospace (NYSE: HWM) by 20% from $75 to $90 on May 6th. The analyst maintained their Strong Buy rating on the stock. Eade's decision comes on the heels of Howmet Aerospace's impressive Q1 2024 earnings report, which beat estimates and showcased the company's resilience amidst supply chain challenges and the recovery of the commercial aerospace market.

During the first quarter of 2024, Howmet Aerospace reported earnings per share (EPS) of $0.57, surpassing the Zacks Consensus Estimate of $0.52 by 35.7%. This also marked a significant improvement from the $0.42 EPS recorded in Q1 2023. The company's revenue for the quarter stood at $1.82 billion, exceeding the Zacks Consensus Estimate of $1.7 billion and representing a 13.8% increase from the same period last year.

Furthermore, Howmet Aerospace reported adjusted EBITDA of $437 million, marking a 21% year-over-year increase, with an adjusted EBITDA margin of 24%. The company generated $95 million in free cash flow and repurchased $150 million worth of its own stock.

Looking ahead, Howmet Aerospace's management provided guidance for Q2 2024, projecting an EPS of $0.58, revenue of $1.835 billion, and adjusted EBITDA of $440 million. For the full year, the company expects an EPS of $2.35, revenue of $7.3 billion, and adjusted EBITDA of $1.75 billion. The management also anticipates generating free cash flow of $800 million in FY 2024.

Executive Chairman & CEO John Plant expressed satisfaction with the company's Q1 performance, highlighting record-breaking results in revenue, adjusted EBITDA, adjusted EBITDA margin, and adjusted EPS. Moreover, Plant emphasized that Howmet Aerospace had achieved positive cash flow in the first quarter, a milestone for the company.

Despite the challenges posed by quality issues at Boeing, Howmet Aerospace remains optimistic about the future. The company expects to see strong demand for air travel, which has already exceeded pre-pandemic levels. This positive outlook is bolstered by robust aircraft OEM backlogs. Although lower 737 MAX volumes are anticipated, primarily due to the aforementioned quality issues, Howmet Aerospace has increased its revenue guidance for FY 2024 by $200 million, reflecting favorable demand in other aspects of its business.

In addition to John Eade's price target increase, other analysts have also expressed bullish sentiments towards Howmet Aerospace. Wells Fargo's Matthew Akers raised their price target by 22.2% from $72 to $88 while Barclays's David Strauss increased their price target by 30.8% from $65 to $85. Both analysts maintained their Strong Buy ratings on the stock.

It is worth noting that 100% of the top-rated analysts currently rate Howmet Aerospace as a Strong Buy or Buy, with no analysts recommending a Hold or selling the stock. The consensus forecast among analysts suggests that the company's upcoming year will deliver an EPS of $2.05, representing a 1.5% decrease from the previous year.

Since the release of Howmet Aerospace's Q1 2024 earnings report on May 2nd, the stock price has seen a 4% increase. Year-over-year, the stock has surged by an impressive 83%, significantly outperforming the S&P 500, which has risen by 25.2% during the same period.

Argus Research analyst John Eade is highly regarded within the financial industry, ranking in the top 6% of Wall Street analysts according to WallStreetZen. With an average return of 10.7% and a 67.2% win rate, Eade specializes in analyzing the Consumer Defensive and Communication Services sectors, among others.

Howmet Aerospace Inc., formerly known as Arconic Inc., is a company that provides advanced engineered solutions for the aerospace and transportation industries. Its offerings include jet engine components, aerospace fastening systems, titanium structural parts for aerospace and defense applications, and forged wheels for commercial transportation. The company is headquartered in Pittsburgh, Pennsylvania.

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