Seaport Global Securities Starts Carpenter Technology (CRS) at Neutral
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Seaport Global Securities initiates coverage on Carpenter Technology (NYSE: CRS) with a Neutral rating and a price target of $38.00.
Analyst Josh Sullivan commented, "Carpenter Technology (CRS) is a premier supplier of the nickel super alloys and titanium wire used in the construction of aircraft. With the$500MM investment in the Athens, AL facility (increasing premium melt >50%) as well as significant expansion of the Dynamet titanium wire facilities, CRS is on the backside of a heavy investment cycle. Therefore, with >50% of sales in aerospace as well as capacity in place, CRS is poised to be a prime beneficiary of the next-generation OEM ramp. However, oil & gas markets were expected to fill capacity while qualifications in Athens were achieved through 2017. Therefore, as O&G and industrial markets have remained weak, utilization has been low, depressing margin potential. CRS has ggressively attacked costs by instituting several strategic initiatives, which have steadily lifted EBITDA margins out of the trough from early2015. While CEO Tony Thene gets an ‘A’ for self-help, the biggest obstacles in front of CRS are marketrelated in aero/energy. Therefore, we are initiating with a Neutral rating as the risk/reward is balanced given the wide-body production re-calibration and the timing for O&G demand."
Shares of Carpenter Technology closed at $37.80 yesterday.
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