Coverage of RTI International Metals, Inc. (
) has been initiated by analysts at Credit Suisse with a Neutral
rating and a target price of $32 a share.idelined"
"RTI is the only titanium pure-play and has the highest relative
commercial aerospace leverage, providing visibility as increasingly
titanium-intensive aircraft ramp. RTI's evolution as a downstream,
value-added manufacturer has broadened product and market
opportunities. Earnings potential improves in 2014, driven by mix,
volume, and lower costs, but shares appear near full value at 18x
FY2 P/E (40% premium to peers)," said Credit Suisse.
"RTI shares outperformed peers significantly in 2012 (+19% vs.
+3%) and again YTD. Valuation appears to reflect earnings power;
therefore, we see limited upside potential beyond our 12-month
target price, absent significant operational outperformance. Plus,
the higher relative defense exposure poses headline risk given
What Could Change Our View?
"We might become more constructive if the multiple continues to
compress or if new mill capacity or fabrication capabilities drive
new wins. Further vertical integration via accretive M&A may
enhance RTI's competitive positioning & profitability. Positive
progress on the A350 program and the absence of cuts to F-35 are
"Our $32 target price is 21.1x P/E and 7.4x EV/EBITDA on our
2014 forecast. Our TP is based on an equally weighted average of
(1) historical P/E, (2) relative P/E, (3) EV/EBITDA, & (4) a
L-T EPS scenario."
Shares of RTI are down 0.87% to $28.59, amid a 52-week range of
$20.29 - $32.43.
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