Key Takeaways
- Bernstein analysts dismiss SpaceX turbine blade manufacturing plans as minimal risk to Howmet Aerospace (HWM)
- HWM dominates more than 50% of the global industrial gas turbine blade castings sector
- Existing long-term contracts with major turbine manufacturers extend through approximately 2030
- Second quarter results showed EPS of $1.33 and revenue reaching $2.55 billion, surpassing forecasts
- Bernstein maintains Outperform rating with $328 target price for HWM shares
Shares of Howmet Aerospace experienced a decline following Elon Musk’s announcement that SpaceX intends to produce industrial gas turbine blades and vanes internally. However, Bernstein analysts view this market reaction as a strategic entry point rather than cause for concern.
HWM began Friday trading at $259.61, sitting significantly below Bernstein’s $328 valuation target, representing approximately 24% potential upside from the August 28 close of $264.85.
SpaceX has outlined ambitious plans to deploy 20 gigawatts of behind-the-meter electricity generation capacity by late 2027, supporting AI data center operations in Bastrop, Texas. The company intends to vertically integrate turbine blade manufacturing to achieve this goal.
Musk has historically identified supplier concentration as a critical constraint for the sector. Howmet represents that concentration point, commanding over half of the global market for industrial gas turbine blade castings.
Despite this, Bernstein’s research team contends that SpaceX’s vertical integration decision reflects market tightness rather than any vulnerability in Howmet’s competitive positioning.
The aerospace manufacturer maintains long-term contractual relationships with all leading industrial gas turbine producers. These agreements are understood to extend through approximately 2030, aligning with Musk’s own acknowledgment that turbine blade supply is essentially committed through that timeframe.
SpaceX’s manufacturing initiative is anticipated to serve primarily internal requirements rather than challenging Howmet’s broader market presence.
Significant technical obstacles exist as well. Achieving high-volume turbine blade production requires specialized expertise, and SpaceX may face difficulties reaching production targets within its aggressive 18-month timeline.
Solid Financial Performance Supports Positive Outlook
Howmet’s initial capacity expansion became operational during the second quarter, with a minimum of six additional expansion projects underway. The industrial gas turbine segment posted 38% growth in the period.
Second quarter earnings per share reached $1.33, exceeding the consensus estimate of $1.24. Revenue totaled $2.55 billion compared to analyst projections of $2.43 billion, marking a 24.1% year-over-year increase.
Management provided third quarter 2026 EPS guidance ranging from $1.34 to $1.36, with full-year 2026 expectations between $5.23 and $5.31.
Wall Street Sentiment and Institutional Holdings
Analyst sentiment leans predominantly positive. The consensus rating stands at Moderate Buy, with a mean price objective of $316.22. JPMorgan elevated its target to $350, Morgan Stanley projects $335, and Susquehanna upgraded its forecast to $340.
Institutional ownership accounts for 90.46% of outstanding shares. NEOS Investment Management expanded its position by 13.1% during the second quarter, bringing total holdings to approximately $17.44 million.
The company also enhanced its quarterly dividend from $0.12 to $0.14 per share, distributed on August 25. The annualized dividend now equals $0.56, producing a 0.2% yield.
HWM’s 52-week trading range extends from $173.38 to $310.00, with the 50-day moving average positioned at $275.44.
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