On Thursday, Baird has increased its price target for Howmet Aerospace Inc. (NYSE: HWM (BMV:HWM)) shares to $144, a significant rise from the previous target of $113. The firm maintains its Outperform rating on the stock. This adjustment follows Howmet Aerospace's recent financial performance, where the company surpassed expectations and provided an optimistic forecast for the future.
Howmet Aerospace, known for its engineering solutions in the aerospace sector, has shown a robust third quarter in 2024, with results that exceeded the market's predictions.
The company's management expressed confidence in the ongoing multi-year production increase within the Commercial Aerospace sector. This optimism is bolstered by an accelerating growth in spare parts, which is projected to make up about 20% of the company's business mix within this decade, a notable increase from around 11% in 2019.
The firm's analysts view Howmet Aerospace as the leading original equipment manufacturer (OEM) in the Aerospace industry. They anticipate that the company will maintain its double-digit growth in the Commercial Aerospace segment beyond 2025. This growth is expected to be supported by increased OEM build rates and a continued acceleration in spare parts demand on legacy engine platforms.
Despite experiencing weaker demand in its Wheels segment, the company's strong performance in the Defense OEM and spares sectors has more than compensated for this downturn. This has contributed to the firm's decision to raise the price target for Howmet Aerospace's stock to $144, reflecting confidence in the company's growth trajectory and market position.
In other recent news, Howmet Aerospace Inc. reported third-quarter earnings that surpassed analyst expectations and subsequently raised its full-year outlook. The company disclosed adjusted earnings of $0.71 per share, exceeding the consensus estimate of $0.65, and revenue rose 11% year-over-year to $1.84 billion.
A significant contribution to this growth came from Howmet's commercial aerospace segment, which saw a 17% revenue increase compared to the same period last year.
CEO John Plant highlighted that adjusted EBITDA grew faster than revenue, increasing 27% year-over-year to $487 million. As a result of these recent developments, Howmet adjusted its full-year earnings guidance to a range of $2.65 to $2.67 per share, exceeding the previous forecast and the $2.59 consensus. The company also adjusted its annual revenue expectations to fall between $7.39 billion and $7.43 billion.
Looking towards 2025, Plant cited robust demand in commercial aerospace, driven by healthy air traffic growth and significant needs for engine spare parts, leading the company to anticipate approximately 7.5% year-over-year revenue growth.
InvestingPro Insights
Howmet Aerospace's recent performance and Baird's optimistic outlook are further supported by real-time data from InvestingPro. The company's revenue growth of 13.2% over the last twelve months and a quarterly growth of 10.68% in Q3 2024 align with the analysts' expectations of continued double-digit growth. This robust growth is reflected in the stock's impressive performance, with a 138.76% price total return over the past year and a 112.73% return year-to-date.
InvestingPro Tips highlight that Howmet Aerospace has raised its dividend for 4 consecutive years, demonstrating a commitment to shareholder returns. Additionally, the company operates with a moderate level of debt, which could provide financial flexibility as it pursues growth opportunities in the aerospace sector.
For investors seeking a deeper understanding of Howmet Aerospace's potential, InvestingPro offers 18 additional tips, providing a comprehensive analysis of the company's financial health and market position.
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