Howmet Aerospace experienced a significant drop in its stock price after SpaceX revealed plans to manufacture its own castings for industrial gas turbines, which are essential for powering data centers.
Despite this setback, analysts from Citigroup and Bernstein have reiterated their buy ratings on Howmet, with Citigroup setting a price target of $329, suggesting a potential upside of 34% from the recent closing price. Bernstein also maintains a price target of $328.
Analysts believe that the SpaceX announcement underscores the critical importance of Howmet's products and highlights the strong demand in the industrial gas turbine market, where Howmet commands over 50% market share. They argue that the risk to Howmet from SpaceX's move is minimal, as the company has established long-term agreements with major industrial gas turbine producers.
Furthermore, Citigroup noted that SpaceX is likely to remain a customer in the supply chain, even if it begins producing its own components. Overall, Howmet's stock has outperformed the S&P 500 over the past year, and analysts see the current dip as a temporary opportunity for investors