- KeyBanc raised ATI’s price target to $132 from $120 and kept an Overweight rating on a strong aerospace and defense outlook.
- Q3 FY2025 results showed $1.13B revenue (+7% YoY), $225M adjusted EBITDA (20% margin), and $0.85 adjusted EPS.
- ATI lifted FY2025 guidance to $848–858M adjusted EBITDA, $3.15–$3.21 EPS, and $330–370M free cash flow, with Q4 EPS guided to $0.84–$0.90.
- Growth is being driven by surging defense demand, expanding jet-engine OEM and MRO content, higher specialty materials pricing, and margin progress toward 2027 targets.
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KeyBanc’s decision to raise its price target to $132, while maintaining an Overweight rating, reflects meaningful confidence in ATI’s ongoing transformation toward higher-value aerospace & defense (A&D) end markets. This target implies upside over current pricing near $124.42, which is just below the 52-week high around $125.45, suggesting the market is already anticipating strong performance but KeyBanc sees room for incremental gains.
ATI’s Q3 2025 financials reinforce KeyBanc’s bullish thesis. Revenue grew 7 % YoY to $1.13 billion, EBITDA expanded 21 % YoY to $225 million, and margins improved substantially—20 % non-GAAP EBITDA margin versus about 17.7 % one year prior. Adjusted EPS was $0.85, representing a large jump from $0.60 in Q3 2024.
Guidance for full-year 2025 was raised, with adjusted EBITDA now projected between $848–858 million (up from prior $810–840 million), EPS expected $3.15–$3.21, and free cash flow in the $330–370 million range. The fourth quarter EPS guidance of $0.84–$0.90 suggests continued momentum in higher-margin segments.
Segmentally, defense saw exceptional growth: up 51 % YoY, 36 % sequentially, across naval, nuclear, missiles, rotary, armored vehicle programs. Jet engines are now ~39 % of total revenue and grew ~19 % YoY, with MRO representing ~50 % of engine sales. Airframe/titanium is also strengthening, with long-term contracts set to boost content and pricing in 2026.
Other tailwinds include increasing materials prices (nickel, exotic alloys), rising throughput and capacity (e.g. specialty materials atomization expansion, zirconium sponge capacity), and improving operational metrics (first-pass yield, uptime). These are supporting margin expansion, aligning with ATI’s goal of 19-21 % EBITDA margin by 2027.
Risks to monitor include supply-chain volatility—raw materials and energy costs; defense spending cycles and contractor bottlenecks; potential OEM production constraints; and ATI’s ability to maintain margin discipline amid rising input and capital costs. Also, since ATI shares are trading above what some fair-value estimates suggest, there’s a risk of correction if growth or execution falters.
Supporting Notes
- KeyBanc’s revised 2026 earnings estimate remains at $4.10 per share, with 2027 EPS raised to $5.05, tied to higher defense and exotic alloys sales.
- Full-year 2025 revenue from A&D increased ~21 % YoY, accounting for ~70 % of Q3 sales.
- Adjusted EBITDA margin expanded to 20.0 % versus ~17.7 % in Q3 2024.
- Net income attributable to ATI for Q3 2025 was ~$110 million GAAP, or ~$0.78 per share; on an adjusted non-GAAP basis EPS was $0.85.
- Full-year guidance for adjusted free cash flow raised to $330-370 million.
- Defense segment revenue growth of 51 % YoY, including strength in naval nuclear, missiles, and armored vehicles.
- ATI is sole source for five of seven advanced nickel alloys in jet engines; increasing content on OEM platforms and expanding qualification in titanium and exotic materials.