UPDATE: J.P. Morgan Lowers PT on Allegheny Technologies on Tepid 2Q13 Outlook
In a report published Thursday, J.P. Morgan analyst Michael F. Gambardella reiterated an Underweight rating on Allegheny Technologies (NYSE: ATI), but slightly lowered the price target from $20.00 to $19.00.
In the report, Michael F. Gambardella noted, “Our thesis for stainless steel pressures to impair ATI's earnings continues to unfold in the near term following weak 4Q12 and 1Q13 earnings as well as a tepid outlook for 2Q13 because of elevated imports, volatile and falling nickel prices, and cautious transactional demand. Additionally, we take a more measured view than the market on the benefit of marquee projects such as the Rowley titanium sponge facility (likely to decrease operating rates down from 60-65% near term) and the HRPF which will not likely materially benefit ATI until 2015 and could trigger additional competition in higher value niche markets. Moreover, the combination of heavy capital spending and weak profitability has weighed on the company's balance sheet, creating the potential need to add further leverage to fund the HRPF and potentially requiring a leverage covenant extension/waiver.”
Allegheny Technologies closed on Wednesday at $26.91.
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