Seaport Global Securities Starts Kaiser Aluminum Corporation (KALU) at Buy
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Seaport Global Securities initiates coverage on Kaiser Aluminum Corporation (NASDAQ: KALU) with a Buy rating and a price target of $100.00.
Analyst Josh Sullivan commented, "We are initiating coverage of Kaiser Aluminum (KALU) with a Buy rating and $100 price target. KALU primarily benefits from two secular trends in the aerospace and automotive industries. In aerospace (~60% of sales), KALU provides aluminum heat treat plate, which is seeing increasing demand as narrow-body build rates ramp. Secondly, KALU’s automotive aluminum extrusions (~15% of sales) are benefiting from increasing aluminum content on automotive designs for light-weighting purposes. However, KALU is also a best-in-breed capital allocator, prudently adding capacity, avoiding expensive acquisitions and steadily improving efficiency. KALU has efficiently utilized a legacy NOL position to organically invest in capacity/efficiency. The crux of our thesis is that these successful investments have fundamentally altered KALU’s earnings profile and, therefore, as margins continue to improve, sales grow and FCF delivers, KALU's strategic multiple should be closer to the group."
Shares of Kaiser Aluminum Corporation closed at $86.84 yesterday.
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