Howmet Aerospace Receives Strong Buy Rating and Price Target Increase of 30.8%

Barclays's David Strauss raised their price target on Howmet Aerospace (NYSE: HWM) by 30.8% from $65 to $85 on 2024/05/06. The analyst maintained their Strong Buy rating on the stock.

Howmet Aerospace, a provider of advanced engineered solutions for the aerospace and transportation industries, recently reported its Q1 2024 earnings. The company exceeded expectations, with earnings per share (EPS) of $0.57, beating the Zacks Consensus Estimate of $0.52 and last year's Q1 EPS of $0.42. Revenue for the quarter came in at $1.82 billion, surpassing the Zacks Consensus Estimate of $1.7 billion and showing a 13.8% increase compared to Q1 2023.

Adjusted EBITDA, a measure of profitability, also saw a significant improvement, reaching $437 million, a 21% year-over-year increase. The adjusted EBITDA margin stood at 24%, reflecting the company's solid operational performance. Howmet Aerospace also generated $95 million in free cash flow during the quarter and repurchased $150 million worth of its own stock.

The company's management provided guidance for Q2 2024 and the full fiscal year. For the second quarter, they expect EPS of $0.58, revenue of $1.835 billion, and adjusted EBITDA of $440 million, with an adjusted EBITDA margin of 24%. Looking ahead to the full fiscal year 2024, management projects EPS of $2.35, revenue of $7.3 billion, and adjusted EBITDA of $1.75 billion, with an adjusted EBITDA margin of 24%. Additionally, they anticipate generating $800 million in free cash flow for the year.

John Plant, Executive Chairman & CEO of Howmet Aerospace, expressed his satisfaction with the company's performance, stating, "Howmet Aerospace delivered an outstanding start to 2024, with results exceeding the high end of guidance on all metrics." He highlighted the record-breaking quarterly results in revenue, adjusted EBITDA, adjusted EBITDA margin, and adjusted EPS. Plant also noted that the company achieved positive cash flow in the first quarter, a milestone for Howmet Aerospace.

The growth prospects for Howmet Aerospace remain positive, as demand for air travel continues to be robust, surpassing pre-pandemic levels. The company is well-positioned to benefit from the record aircraft original equipment manufacturer (OEM) backlogs. However, there have been some challenges related to Boeing's quality issues, resulting in slower-than-expected 737 MAX production. As a result, Howmet Aerospace has adjusted its guidance, assuming a lower volume of 737 MAX production in FY 2024.

In addition to David Strauss from Barclays, other analysts have also updated their ratings and price targets for Howmet Aerospace on 2024/05/06. Matthew Akers from Wells Fargo raised their price target by 22.2% from $72 to $88, maintaining their Strong Buy rating on the stock. John Eade from Argus Research raised their price target by 20% from $75 to $90, also maintaining their Strong Buy rating.

According to WallStreetZen, 100% of 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 is that the company will deliver EPS of $2.05 for the upcoming year, representing a slight decline of 1.5% compared to the previous year.

Looking at the stock's performance, Howmet Aerospace has seen a 4% increase in its stock price since the latest quarterly report on 2024/05/02. Year-over-year, the stock has surged by an impressive 83%, outpacing the S&P 500, which has grown by 25.2% during the same period.

Barclays analyst David Strauss, who raised the price target and maintained the Strong Buy rating on Howmet Aerospace, is ranked in the top 14% of Wall Street analysts by WallStreetZen, with an average return of 13.3% and a 70% win rate. Strauss specializes in the Industrials and Technology sectors.

Howmet Aerospace, formerly known as Arconic Inc., is headquartered in Pittsburgh, Pennsylvania. The company's offerings include jet engine components, aerospace fastening systems, titanium structural parts for aerospace and defense applications, and forged wheels for commercial transportation.

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