ATI - ATI: Near Term Resistance But Strong Long-Term Prospects And Decent Valuation (Rating Upgrade)

2024-06-22 07:52:46 ET

Summary

• The AA&S segment remains weak but showing improvement, and the HPMC segment continues to show strength.
• Strong demand primarily in the A&D end market should continue to drive growth in the quarters ahead.
• Expected revenue growth, strong pricing and operational improvement should benefit margin.
• As things are improving and long-term prospects remain favorable, I am upgrading ATI to a BUY considering its discounted valuation.

The Thesis

The topline weakness of ATI ( ATI ) continued as it entered 2024, however, the company saw some improvement in the AA&S segment due to increased titanium shipment for airframes during the quarter. I expect the topline to grow in the coming quarters as the demand environment remains strong for the company's materials mainly in the A&D and medical end market. The capacity expansion initiative for titanium production also continued which should drive the company's sales in the coming years....

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