On Wednesday, Truist Securities increased its price target for Howmet Aerospace Inc. (NYSE:HWM (BMV:HWM)) to $105, up from the previous $88, while reiterating a Buy rating on the stock. This adjustment comes following the company's second-quarter financial report for 2024.
The firm highlighted several positive developments that influenced the decision to raise the price target. Howmet Aerospace's second-quarter performance showed substantial improvement, leading to an increase in financial guidance. The company achieved a 50% rate in incremental margins, indicating efficient cost control and profitability from additional revenues.
Furthermore, Howmet Aerospace is experiencing significant share gains and is actively reducing its debt. The company's cash generation is also on an upward trajectory. This financial strengthening is occurring ahead of anticipated increases in aircraft production rates, which are expected to benefit the company further.
The commercial aerospace aftermarket is particularly strong, driven by sustained demand for legacy engines. This sector's robustness was a key factor behind the uplift in revenue guidance. The analyst from Truist Securities suggests that, with labor and productivity showing improvement and a favorable product mix, there is potential for Howmet Aerospace to exceed management's projected incremental margins of around 35% in the 2025/2026 period.
The report from Truist Securities indicates a positive outlook for Howmet Aerospace, with several factors contributing to the company's promising financial trajectory. The raised price target to $105 reflects the analyst's confidence in the company's ongoing and future performance.
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