Key Takeaways
- Shares of HWM jumped 3.5% Tuesday following endorsements from Citi and Bernstein after Monday’s 7.5% decline
- Citi added HWM to its 30-day upside catalyst watch list with a Buy rating and $329 target price
- Bernstein upgraded its target to $328 from $248 while maintaining an Outperform stance
- SpaceX announced plans to manufacture turbine blades in-house for a 20GW Texas AI data center by late 2027
- Howmet maintains long-term contracts with all major turbine manufacturers extending through 2030 and continues capacity expansion
Shares of Howmet Aerospace (HWM) staged a recovery Tuesday, gaining 3.5% during morning hours as two prominent Wall Street firms characterized Monday’s selloff as an excessive market reaction presenting a strategic entry point.
The stock finished Monday’s session at $244.95, retreating approximately 7.5% following Elon Musk’s announcement that SpaceX intends to produce gas turbine blades and vanes internally at a forthcoming Texas facility in Bastrop. Investors reacted negatively despite Howmet’s impressive gas-turbine segment growth of 39% in the first quarter, following a robust 25% expansion in 2025.
The announcement relates to SpaceX’s ambitious 20-gigawatt power infrastructure project designed to support AI data center operations, with a completion deadline set for late 2027. Musk indicated that internal manufacturing of turbine components could accelerate deployment timelines by up to 18 months, addressing what he identified as a critical supply chain constraint.
Citi’s John Godyn presented a contrarian interpretation, suggesting that SpaceX’s vertical integration strategy essentially “validates the mission-critical importance of HWM components” and underscores robust market demand rather than undermining Howmet’s competitive standing.
The investment bank established a $329 price objective, representing approximately 34% appreciation potential from Monday’s closing price. Citi projects earnings per share of $5.37 for 2026, $6.76 for 2027, and $8.08 for 2028, with the latter two projections exceeding current Street consensus.
SpaceX’s Aggressive Schedule Benefits Howmet
Bernstein’s Douglas Harned increased his price objective to $328 from $248 while reaffirming an Outperform recommendation. He contends SpaceX’s decision stems primarily from constrained industry supply capacity and a preference for operational autonomy rather than performance concerns with current suppliers.
Bernstein expressed skepticism regarding SpaceX’s ability to achieve commercial-scale production within Musk’s ambitious 18-month timeframe. Manufacturing turbine blades engineered to withstand extreme temperatures and mechanical stress demands sophisticated machinery, specialized technical knowledge, and advanced coating processes that present significant scaling challenges.
Howmet’s secured revenue pipeline offers substantial protection. The company has established multi-year supply commitments with all leading industrial gas turbine manufacturers extending through 2030, creating overlap with SpaceX’s anticipated production timeline.
Manufacturing Expansion in Progress
Howmet is actively advancing its production capabilities. Additional turbine blade manufacturing capacity became operational in the second quarter, with a minimum of six further expansion initiatives scheduled for completion by the fourth quarter’s end. Collectively, these investments could increase total capacity by approximately 38% compared to first quarter 2025 baseline levels.
Both firms emphasized that SpaceX’s anticipated production volume would primarily serve its internal power requirements rather than creating broad market competition. Bernstein suggested SpaceX would likely continue participating as a customer within the existing supply ecosystem.
Among 24 analysts monitoring HWM, 20 assign Buy or Strong Buy recommendations. The stock currently trades approximately 18% beneath its 52-week peak of $310.
Broader market headwinds tempered Tuesday’s recovery. The S&P 500 declined 0.6% while the Nasdaq retreated 1.0% during morning trading, weighed down by climbing Treasury yields and crude oil prices exceeding $92 per barrel.
Citi identified forthcoming investor conferences as potential positive catalysts, where Howmet management is anticipated to provide enhanced transparency regarding capacity additions and customer agreements.
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