Allegheny Technologies Incorporated (ATI) may see double-digit upside from current levels, especially thanks to an expected recovery in the aerospace aftermarket and the global hydrocarbon and medical markets in the 2013 to 2014 time frame, says Philip Gibbs, Equity Research Analyst at KeyBanc Capital Markets Inc.
“[One name] we prefer in the specialty metals arena would include Allegheny Technologies, where we see 35% upside from current levels. I feel like most investors with this company focus heavily on the stainless steel exposure, which is a highly competitive market. However, we see them addressing those concerns and putting them to rest over the next 12 to 18 months as their new world class hot mill is commissioned,” Gibbs said.
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Gibbs says the company is trading inexpensively and earnings are on the lower end, and the verticals to which this builder is exposed are expected to see a bounce in the next couple of years, driving stock price.
“This is a company that’s very backward-integrated in a growing global titanium market and should benefit in 2013 and 2014 from a recovery in the aerospace aftermarket and the global oil and gas and medical markets. Allegheny is a company where we see earnings in the bottoming mode, something we like from a contrarian perspective. Valuation is on the lower end of normal,” Gibbs said.