Friday, FBR Capital Markets reiterated RTI International Metals, Inc. (RTI) stock with an Outperform rating and a price target of $30. The brokerage reduced its 2010 per share estimate to loss $0.25 from profit $0.36.
Analyst Patrick McCarthy noted that RTI Metals was extremely weak after reporting fourth quarter results. The market's primary concern was the revelation that Airbus did not take 1 million pounds of titanium under its take-or-pay agreement during the fourth quarter, and Airbus has also signaled that it will take roughly 2.5 million pounds, versus the prior expectation of 5 million, in 2010.
The analyst said that 2010 is going to be a very challenging year for the company. However, when key titanium consuming aircraft begin their production runs, RTI will have as much, or more, leverage to the up-cycle than any other company in the space.
To be clear, the analyst does not think you should expect improving fundamentals from RTI in 2010. The mill business will continue to be weak, and there are risks associated with B787 production. However, expectations are now extremely low, and the valuation is extremely attractive. As a result, the analyst continues to like the stock, and reiterated his Outperform rating and price target of $30.
Currently, RTI is up $0.23 or 1.08% and trading at $21.59.
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