Is Howmet Aerospace a buy after a bullish upgrade?

Key Points

• Howmet Aerospace is up 3% after a bullish upgrade from Truist. 
• Analysts believe the Boeing supplier will be unaffected by the investigation surrounding the in-flight incident with Boeing's 737 Max 9 jet. 
• Investors should look for an opportunistic entry point.  

Howmet Aerospace Inc. NYSE: HWM stock is up more than 3% after Truist Financial Corporation NYSE: TFC upgraded the stock from a Hold to a Buy with a $74 price target, which is significantly higher than the firm's previous $46 price target.

Two days before that upgrade, an analyst at Bernstein Research initiated coverage of HWM stock with an Outperform rating and a $67 price target. 

If that were all to the story, this would be a very short article, but there's more to the story. 

A bad week for Boeing 

It's been a bad week for The Boeing Company NYSE: BA and its shareholders. One of the company's 737 Max 9 jets was forced to make an emergency landing after a metal panel plugging an unused emergency exit blew out of the jet's cabin shortly after the Alaska Air Group Inc. NYSE: ALK flight took off.  

The share price of BA stock is down over 9% as investors try to figure out the complete effect of grounding the company's 737 MAX line for closer inspection.  

While Boeing is at the center of the storm, it is not the only company under scrutiny. Any time a part falls off an aircraft, regulators look at every link in the supply chain. 

That makes the current situation with Howmet and other aerospace stocks worth noting. 

Howmet manufactures jet engine components, aerospace fastening systems, and titanium structural parts that are considered essential for performance and efficiency. The company generates approximately 23% of its revenue through its commercial aerospace segment and supplies parts for both Boeing and Airbus. 

With that said, the early read is that any issue with the 737 Max jets is a quality control issue within Boeing and not a design feature that would call into question the parts that Boeing receives from suppliers like Howmet.  

Demand is increasing 

Howmet reported third-quarter earnings in November 2023. At that time, chair and chief executive officer (CEO) John Plant raised the company's year-over-year revenue growth expectations to approximately 7% for the commercial aerospace segment.  

That would be a key reason that the company raised its full-year revenue outlook to a range of $6.53 billion to $6.56 billion from a range of $6.40 billion to $6.70 billion. It also raised its earnings per share (EPS) outlook to a range of $1.76 to $1.78, up from $1.69 to $1.71.  

Is HWM stock a buy? 

For all the good news, if you're not yet involved with HWM stock, you may want to wait for a better price point. After gapping up in November, the stock is trading well above its 50- and 200-day moving averages. Additionally, the stock has a relative strength indicator of around 61, which shows that the stock is approaching an overbought level.  

However, the stock is trading much closer to its 10- and 20-day simple moving averages. That corresponds to a price target between $53.70 and $53.96 at those price points or lower; analysts see HWM stock as a Buy.