Deutsche Bank Upgrades Allegheny Technologies (ATI) to Buy
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Deutsche Bank upgraded Allegheny Technologies (NYSE: ATI) from Hold to Buy with a price target of $20.00 (from $15.00). Analyst Jorge Beristain noted easing leverage concerns following the closure of its Rowley facility.
"We update our model to include the August 24th announced closure of Allegheny Technologies’ Rowley facility. While end-markets remain weak, management is (finally) acting to exit low-margin stainless products and close high-cost operations with benefits expected beginning in 2017. Post-3Q6’s equity raise (20% dilution), Balance Sheet leverage (ND/EBITDA) could improve to 3.4x by YE17 vs 10.0x on 2016E. On announced incremental cash flow from inventory reductions (+$50m) and operating profit improvements guided for 2017 (+$50m) we raise our target EV-based valuation multiple a half-turn to 8.0x, increasing our PT to $20/sh ($15/sh prior) and upgrade ATI to a Buy," said Beristain.
Shares of Allegheny Technologies closed at $16.65 yesterday.
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