The firm upgraded the specialty metal producer due to improving pricing trends.
"What appears to be the beginning of a cycling changeover in titanium pricing (first since 2011) as well as a structural change in nickel pricing provides an underpinning for ATI's end market," Sterne Agee said.
TheStreet Ratings team rates ALLEGHENY TECHNOLOGIES INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate ALLEGHENY TECHNOLOGIES INC (ATI) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, poor profit margins and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Metals & Mining industry. The net income increased by 1551.4% when compared to the same quarter one year prior, rising from $10.50 million to $173.40 million.
- Compared to its closing price of one year ago, ATI's share price has jumped by 25.63%, exceeding the performance of the broader market during that same time frame. Although ATI had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
- ATI, with its decline in revenue, underperformed when compared the industry average of 7.9%. Since the same quarter one year prior, revenues fell by 10.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The gross profit margin for ALLEGHENY TECHNOLOGIES INC is currently extremely low, coming in at 12.37%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 18.94% is above that of the industry average.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, ALLEGHENY TECHNOLOGIES INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
- You can view the full analysis from the report here: ATI Ratings Report