CRS - Carpenter Technology Shares Have Bounced But There's Room To Go On A Cyclical Recovery

• Carpenter Technology's business likely hit bottom in the December quarter, with revenue down 36% yoy and 2% qoq, but sequential growth in aerospace.
• Aerospace will be a multiyear recovery, with aftermarket demand recovering first, followed by narrowbody new-builds and then widebodies.
• Auto/truck, industrial, and medical demand should also recover from here, but aerospace is the driver of the business at 50%+ of revenue.
• Soft magnetics for motors used in APUs and electric motors and powdered metals for additive manufacturing offer some secular growth potential in the coming years.
• Based on past cycles, I think a mid-$30's fair value is reasonable now, with upside into the $40's over time as aero demand builds.

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