On Wednesday, BofA Securities updated its outlook on Howmet Aerospace Inc. (NYSE:HWM (BMV:HWM)), increasing the price target to $135 from the previous $100 while maintaining a Buy rating on the stock.
The revision reflects the company's strong performance in the Industrial segment, particularly in Oil & Gas and Industrial Gas Turbines (IGT), which saw increases of 26% and 20%, respectively.
According to the firm, Howmet Aerospace is well-positioned to benefit from the growing energy demand driven by artificial intelligence and data center power needs. Industrial Gas Turbines are essential components in nuclear power plants, used to generate mechanical power and operate various systems such as pumps, generators, and gas compressors.
Howmet Aerospace's leadership as a top supplier of IGT turbine blades is underscored by its relationships with major industry players like GE Vernova, Siemens (ETR:SIEGn), Mitsubishi Heavy, and Ansaldo. This strategic positioning is expected to play a significant role in the company's future growth prospects.
The analyst noted that while significant demand for IGT may take a few years to fully materialize, the potential acceleration of nuclear energy development could lead to even better performance than currently anticipated. This scenario presents a possible upside to the firm's existing estimates for Howmet Aerospace.
InvestingPro Insights
Howmet Aerospace's strong market position, as highlighted by BofA Securities, is further supported by recent financial data and analyst insights from InvestingPro. The company's revenue growth of 13.2% over the last twelve months and a robust EBITDA growth of 26.75% align with the positive outlook on its Industrial segment performance.
InvestingPro Tips reveal that Howmet Aerospace has raised its dividend for 4 consecutive years, indicating financial stability and shareholder value focus. Additionally, 12 analysts have revised their earnings upwards for the upcoming period, suggesting growing confidence in the company's future performance. This optimism is reflected in the stock's impressive 126.32% total return over the past year.
While trading near its 52-week high, Howmet Aerospace maintains a PEG ratio of 0.63, suggesting it may still be undervalued relative to its growth prospects. This could support BofA's increased price target and Buy rating.
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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