Why Howmet (HWM) Stock Is Up Today

What Happened?

Shares of aerospace and defense company Howmet (NYSE:HWM) jumped 3.3% in the morning session after Baird raised its price target on the company to $310 from $225 while keeping an Outperform rating. 

This sentiment was echoed by other firms, as both Bernstein and BofA Securities also increased their price targets. The positive outlook from analysts appeared to be rooted in the company's solid financial results. Howmet had demonstrated strong year-over-year revenue growth, fueled by notable increases in its commercial and defense aerospace segments. In addition, the company had previously raised its own financial guidance, citing expectations for healthy market demand and potential market share gains.

After the initial pop the shares cooled down to $217.64, up 3.6% from previous close.

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What Is The Market Telling Us

Howmet’s shares are not very volatile and have only had 7 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was 5 months ago when the stock dropped 10.2% on the news that the company reported record-breaking second-quarter financial results that were overshadowed by a decline in its Forged Wheels business segment. 

The company posted record second-quarter revenue of $2.05 billion and a 36% jump in adjusted earnings per share, and also lifted its full-year financial outlook. However, investors appeared to focus on a weak spot in the report. Howmet's Forged Wheels segment, which serves commercial transportation, experienced a 1% revenue dip. The company connected this to a broader 4% decline in the commercial transportation market. This specific weakness, combined with the stock's nearly 76% rally year-to-date, likely prompted investors to take profits despite the strong headline numbers.

Howmet is up 2.8% since the beginning of the year, and at $217.64 per share, has set a new 52-week high. Investors who bought $1,000 worth of Howmet’s shares 5 years ago would now be looking at an investment worth $7,715.

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