Shares of Howmet Aerospace demonstrated notable strength in Friday's trading session, closing higher by 2.2% at $250.07. The upward move followed the company's release of financial results and forward-looking projections that surpassed market expectations, prompting a positive reassessment from several Wall Street analysts.
Financial Performance and Upbeat Guidance
Howmet reported a robust 15% year-over-year increase in fourth-quarter revenue, reaching $2.2 billion. Adjusted earnings per share for the quarter surged 42% to $1.05. More significantly, the company provided first-quarter adjusted EPS guidance in the range of $1.09 to $1.11, comfortably exceeding the consensus analyst estimate of $1.02. For the full 2026 fiscal year, management anticipates revenue between $9.0 billion and $9.2 billion, with adjusted EPS projected from $4.35 to $4.55 and free cash flow expected to land between $1.55 billion and $1.65 billion.
Chief Executive Officer John Plant attributed the strong outlook to a "record OEM backlog that extends well into the next decade," underscoring sustained demand within commercial aerospace and defense end markets. He specifically highlighted the company's gas turbine business, which he described as entering its "largest growth phase in years," driven significantly by rising demand for electricity generation, particularly from natural gas to power data centers.
Market Context and Analyst Reaction
The positive sentiment around Howmet contributed to broader gains in the aerospace and defense sector. The iShares U.S. Aerospace & Defense ETF (ITA) advanced approximately 1% on the day, outperforming the broader SPDR S&P 500 ETF (SPY), which saw minimal movement. Peers such as Curtiss-Wright (CW), Heico (HEI), and Hexcel (HXL) also traded higher, reflecting a favorable read-across for suppliers benefiting from elevated aircraft production rates and aftermarket service demand.
In response to the results, Susquehanna analyst Charles Minervino raised his price target on Howmet shares substantially, moving from $255 to $290 while maintaining a Positive rating. In his research note, he characterized the company as "a key supplier within the Commercial Aerospace and Defense end markets," reflecting confidence in its strategic position and execution.
Capital Allocation and Strategic Initiatives
Investors are also focusing on the company's capital return program and pending strategic moves. Howmet confirmed a dividend payment scheduled for February 25. Furthermore, the company reported that, as of February 12, it had approximately $1.347 billion remaining under its existing share repurchase authorization, providing continued flexibility for returning capital to shareholders.
A key item on the strategic agenda is the planned acquisition of Consolidated Aerospace Manufacturing (CAM). Management reiterated its target to close the transaction in the first half of 2026. The successful integration of this acquisition is viewed as a potential catalyst for further growth and margin enhancement.
Risks and Considerations
Despite the optimistic outlook, the investment thesis is not without potential hurdles. Any material disruption in aircraft production schedules, a re-emergence of supply chain complexities, or execution missteps related to the CAM acquisition could pose risks to the company's earnings projections and cash flow targets. The broader macroeconomic environment and its impact on defense budgets and commercial travel demand also remain factors for ongoing monitoring.
Friday's trading volume in Howmet shares was approximately 2.5 million, indicating solid investor interest. The stock traded within a daily range of $243.26 to $255.56 before settling near the session's high. The combination of strong fundamentals, raised guidance, and supportive analyst commentary has positioned Howmet Aerospace as a focal point for investors seeking exposure to the ongoing recovery and growth in the global aerospace industry.