Key Takeaways
- Shares of HWM gained 3.5% Tuesday following a 7.5% decline triggered by SpaceX manufacturing plans
- Citi initiated a 30-day positive catalyst watch on HWM with a Buy rating and $329 target price
- Bernstein boosted its target from $248 to $328 while maintaining an Outperform stance
- SpaceX intends to produce turbine blades internally for a massive 20GW data center power project in Texas by late 2027
- Howmet maintains binding contracts with all leading turbine manufacturers extending through 2030 and is actively adding production capacity
Shares of Howmet Aerospace (HWM) staged a recovery Tuesday, advancing 3.5% during morning hours as prominent Wall Street firms Citi and Bernstein characterized Monday’s steep decline as an excessive market reaction that presents a strategic entry point.
The stock finished Monday’s session at $244.95, reflecting a roughly 7.5% decline after Elon Musk disclosed that SpaceX intends to establish in-house production of gas turbine blades and vanes at a forthcoming Bastrop, Texas facility. The announcement rattled shareholders who had witnessed Howmet’s gas-turbine segment surge 39% during Q1 following a robust 25% expansion throughout 2025.
The manufacturing initiative from SpaceX connects to an ambitious 20-gigawatt power infrastructure buildout designed to support AI data center operations, with completion anticipated by year-end 2027. Musk indicated that bringing turbine component casting capabilities in-house could potentially accelerate gas turbine deployment timelines by up to 18 months, addressing what he characterized as a critical supply chain constraint.
However, Citi analyst John Godyn presented a contrarian perspective. He asserted that SpaceX’s strategic decision effectively “validates the mission-critical importance of HWM components” and underscores robust market demand rather than representing a competitive challenge to Howmet’s market standing.
Citi established a $329 valuation target, representing approximately 34% appreciation potential from Monday’s closing level. The firm projects HWM will deliver earnings of $5.37 per share during 2026, rising to $6.76 in 2027 and $8.08 in 2028, with the latter two years exceeding prevailing Street estimates.
SpaceX Production Schedule Benefits Howmet
Bernstein analyst Douglas Harned elevated his valuation target to $328 from $248 while reaffirming an Outperform recommendation. He contended that SpaceX’s vertical integration strategy stems primarily from constrained industry-wide supply availability and desire for operational control rather than performance concerns with current suppliers.
Bernstein also expressed skepticism regarding SpaceX’s ability to achieve meaningful production volumes within Musk’s stated 18-month timeframe. Manufacturing turbine blades engineered to withstand extreme temperatures and mechanical stress demands specialized foundry equipment, deep technical knowledge, and sophisticated coating processes that present significant scaling challenges.
Howmet’s secured revenue pipeline offers meaningful downside protection. The aerospace manufacturer maintains multi-year supply commitments with every major industrial gas turbine producer globally through 2030, creating a timeframe that substantially overlaps with SpaceX’s projected production ramp.
Production Buildout Progressing on Schedule
Howmet isn’t remaining passive in the face of market dynamics. Additional turbine blade manufacturing capacity became operational during Q2, with a minimum of six supplementary expansion projects slated for completion by Q4’s conclusion. Collectively, these initiatives could increase production capacity by approximately 38% compared to Q1 2025 baseline levels.
Both investment banks emphasized that SpaceX’s eventual production would likely serve its proprietary energy requirements rather than entering broader commercial competition. Bernstein suggested SpaceX would probably maintain purchasing relationships within the established supply ecosystem irrespective of internal capabilities.
Among 24 Wall Street analysts tracking HWM, 20 maintain Buy or Strong Buy recommendations. Shares currently trade approximately 18% beneath the 52-week peak of $310.
Broader equity market weakness tempered Tuesday’s recovery. The S&P 500 declined 0.6% while the Nasdaq composite dropped 1.0% during morning trading, weighed down by climbing Treasury yields and crude oil prices exceeding $92 per barrel.
Citi identified forthcoming investor conferences as potential positive catalysts, where Howmet management is anticipated to provide enhanced transparency regarding capacity expansion initiatives and customer commitment details.
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