Analyst Actions: RTI Int'l Metals Initiated With Neutral, $32 PT at Credit Suisse; Shares Dip 1%

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Coverage of RTI International Metals, Inc. ( RTI ) 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.

Rationale

"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 sequestration."

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 also catalysts."

Valuation

"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.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Commodities

Referenced Stocks: RTI

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