ATI +6% after Wolfe upgrade on strong margin expansion potential

Aug. 05, 2022 3:13 PM ETATI Inc. (ATI)By: Carl Surran, SA News Editor

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ATI Inc. (NYSE:ATI) +5.7% in Friday's trading after Wolfe Research upgraded shares to Outperform from Market Perform with a $33 price target, following the specialty metals company's Q2 beat and raise.

Wolfe's Timna Tanners said she had been cautious on the pace of recovery and margin expansion potential, yet ATI's (ATI) strong Q2 and outlook persuaded her of the case for more upside for the stock.

While 10x EV/EBITDA exceeds ATI's (ATI) historical 8x-9x, Tanners believes a greater aerospace weighted portfolio can garner a higher multiple, in addition to projected EBITDA margin growth to ~16% in 2023 from a five-year average 11%, and her 2023 estimated EBITDA rises to $670M from $552M assuming sustained sales and margin growth, well above consensus $556M.

ATI (ATI) shares have jumped 80% YTD and 52% during the past year.

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