- KeyBanc raised ATI’s price target to $132 from $120 and reiterated an Overweight rating on a strong aerospace and defense outlook.
- A&D now represents about 70% of sales, helping drive Q3 FY2025 adjusted EBITDA margin to ~20% and lifting FY2025 guidance to $848–$858M EBITDA, $3.15–$3.21 EPS, and $330–$370M free cash flow.
- Growth in jet engines, defense, and airframes plus richer mix and higher nickel/titanium/zirconium pricing are expanding margins, including ~24% in the HPMC segment.
- Key risks include raw material volatility, dependence on aerospace OEM ramp-ups, softer industrial demand, and execution on margin and capital allocation plans.
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KeyBanc’s upward revision reflects a consolidation of several positive developments at ATI Inc. First, the A&D segments are demonstrating accelerating revenue growth: third quarter 2025 A&D sales rose ~21% year-over-year and now make up about 70% of ATI’s total sales. Combined with margin expansion—ATI delivered ~20% adjusted EBITDA margin in Q3 vs ~17.7% in Q3 2024—this reveals operational leverage and favorable mix shifts.
Second, ATI’s guidance has been raised further. Full year 2025 adjusted EBITDA is now projected at $848-858M (up from ~$810-840M) and full-year EPS at $3.15-$3.21. Free cash flow guidance was also increased to $330-370M. KeyBanc is projecting 2026 earnings per share of $4.10 and raised its 2027 EPS estimate to $5.05, assuming continued A&D growth of ~12% year-over-year, with strong contributions from jet engines, airframe/titanium, defense, and MRO (maintenance, repair & overhaul).
Third, commodity dynamics and materials portfolio strength provide upside. KeyBanc highlights rising spot prices of LME nickel and exotic alloys, which improves margin potential especially in ATI’s nickel-, titanium- and zirconium-based products. ATI’s HPMC segment, which carries a heavier weight to high-temp alloys and jet engine forgings, has already seen its margin in Q3 expand to ~24.2%.
Strategic implications: ATI appears to be executing on its transformation toward a higher margin, more A&D-centric specialty materials business. The increasing share of A&D provides both revenue visibility and better margin profiles. Key questions for investors will include sustainability of commodity‐driven tailwinds, cyclicality or timing of aerospace OEMs (Boeing/Airbus), defense budget consistency, and exposure to weaker industrial end markets. Upcoming quarterly results, industrial demand metrics, and input cost trends are key near-term monitoring points.
Supporting Notes
- KeyBanc raised its price target to $132 from $120 and kept its Overweight rating on ATI.
- ATI’s shares have returned ~120% over the past year and are near their 52-week high of ~$125.45.
- Full-year 2025 adjusted EBITDA guidance raised to $848-$858 million; adjusted free cash flow raised to $330-$370 million.
- Q3 2025 adjusted EBITDA was $225 million, up ~21% YoY; margin expanded to ~20.0% from ~17.7% in Q3 2024.
- Aerospace & Defense sales represent ~70% of total ATI sales in Q3 2025; defense revenue up ~51% YoY; jet engines +19%; airframes +9%.
- HPMC segment margin ~24.2% in Q3; AA&S segment margin ~17.3%; both significantly improved year-over-year.
- 2026 EPS estimate from KeyBanc is ~$4.10; 2027 EPS estimate raised to ~$5.05 with projected EBITDA ~US$1.15B.