Seaport Global Securities Starts Allegheny Technologies (ATI) at Buy
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Seaport Global Securities initiates coverage on Allegheny Technologies (NYSE: ATI) with a Buy rating and a price target of $21.00.
Analyst Josh Sullivan commented, "We are initiating coverage of Allegheny Technologies with a Buy rating and $21 price target. The company has executed a metamorphosis over the last year as commodity operations were divested. As a result, +50% of sales year to date were Aerospace & Defense related, which are expected to continue to climb. Further, ATI’s technology heritage dictates that content per shipset of next-generation jet engines is significantly higher than legacy engines. ATI’s isothermal forges were also a likely net beneficiary of the delay in Alcoa’s development isothermal forge, which adds high value content just as the narrow-body ramp begins. With regard to ATI’s portfolio pivot away from commodity products, the Flat Rolled segment is on track to return to profitability in Q4:16, and, as a result, ATI’s strategic trajectory is pointing towards two developments. The return to profitability and value of the HRPF make an Alcoa-like separation more feasible, although pension issues need to be mitigated. Secondly, aerospace OEMs' cost initiatives will incentivize supply chain consolidation, for which ATI's unique assets will command a premium."
Shares of Allegheny Technologies closed at $17.95 yesterday.
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