Key Takeaways
- HWM shares gained 3.5% on Tuesday following a 7.5% decline the previous day that analysts deemed excessive
- Citi initiated a 30-day upside catalyst watch on HWM with a Buy rating and $329 target price
- Bernstein upgraded its target to $328 from $248 while maintaining its Outperform recommendation
- SpaceX intends to produce turbine blades in-house for a massive 20GW AI data center initiative in Bastrop, Texas by late 2027
- Howmet maintains long-term contracts with all leading turbine manufacturers extending through 2030 and continues capacity expansion
Howmet Aerospace (HWM) staged a recovery on Tuesday, advancing 3.5% during morning hours as major investment banks Citi and Bernstein characterized Monday’s steep decline as an overreaction that presents a compelling entry point for investors.
The aerospace components manufacturer finished Monday’s session at $244.95, registering approximately a 7.5% decline after Elon Musk disclosed that SpaceX intends to produce gas turbine blades and vanes internally at a new Texas manufacturing site. The announcement rattled shareholders who had witnessed Howmet’s gas-turbine segment surge 39% in the first quarter following a 25% increase throughout 2025.
SpaceX’s in-house manufacturing initiative supports an ambitious 20-gigawatt power infrastructure project designed for artificial intelligence data centers, with completion scheduled for the end of 2027. Musk indicated that internal production of turbine components could accelerate gas turbine deployment by up to 18 months, addressing what he identified as a critical supply chain constraint.
Citi analyst John Godyn presented a contrarian perspective. He stated that SpaceX’s strategic decision effectively “validates the essential role of HWM components” and underscores robust market demand rather than signaling vulnerability in Howmet’s competitive position.
Citi established a $329 price target, representing approximately 34% potential upside from Monday’s closing price. The firm projects HWM will deliver earnings of $5.37 per share in 2026, $6.76 in 2027, and $8.08 in 2028, with the latter two projections exceeding consensus Street estimates.
SpaceX’s Extended Timeline Benefits Howmet
Bernstein analyst Douglas Harned increased his price target to $328 from $248 while reaffirming an Outperform rating. He contends SpaceX’s vertical integration strategy stems primarily from constrained industry capacity and operational control objectives rather than performance issues with current suppliers.
Bernstein also expressed skepticism regarding SpaceX’s ability to achieve full-scale production within Musk’s ambitious 18-month timeframe. Manufacturing turbine blades that withstand extreme temperatures and mechanical stress demands specialized manufacturing infrastructure, advanced technical knowledge, and sophisticated coating processes that present significant scaling challenges.
Howmet’s secured contract portfolio offers substantial protection. The manufacturer maintains long-term supply commitments with every major industrial gas turbine producer extending through 2030, a timeframe that coincides with SpaceX’s anticipated production ramp-up.
Production Capacity Increases Already in Progress
Howmet continues advancing its own expansion initiatives. Additional turbine blade manufacturing capacity became operational during the second quarter, with a minimum of six additional expansion projects scheduled for completion by the fourth quarter’s conclusion. These combined initiatives could increase total capacity by up to 38% compared to first quarter 2025 levels.
Both investment banks emphasized that SpaceX’s production output will primarily serve its internal power requirements rather than entering the broader commercial market. Bernstein suggested SpaceX would likely continue participating as a customer within the wider supply ecosystem.
Among 24 analysts tracking HWM, 20 maintain Buy or Strong Buy recommendations. The stock currently trades approximately 18% below its 52-week peak of $310.
Broader market headwinds tempered Tuesday’s recovery. The S&P 500 declined 0.6% while the Nasdaq fell 1.0% during morning trading, pressured by climbing Treasury yields and crude oil prices exceeding $92 per barrel.
Citi identified forthcoming investor conferences as potential catalysts, where Howmet management is anticipated to provide enhanced visibility into capacity expansion timelines and customer contract commitments.
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