UPDATE: Credit Suisse Initiates Coverage on Haynes International

In a report published Thursday, Credit Suisse analyst Ross Cowley initiated coverage on

at Neutral, with a $56.00 price target. According to the report, HAYN's niche position in the nickel-based super-alloy market offers leverage to the well known aerospace up-cycle (41% of sales). “HAYN is one of the only non-integrated mill producers of nickel-based super-alloys, which may provide M&A optionality given its smaller relative size,” the report said. “However, leading indicators for a recovery remain weak and consensus may still be too high. Internal investments should drive margin improvement in FY'15, but a robust topline recovery is needed as well. Peers are adding new capacity, which will intensify competitive pressures, potentially limiting upside in volumes and pricing.” The report further asserted that the $56.00 target price is 19 times the analysts FY'15 EPS forecast and is based on an equally weighted average of historical price-to-earnings, relative price-to-earnings, EV/EBITDA, and a long-term EPS scenario to capture the benefit of operating leverage as volumes return. HAYN closed Wednesday at $52.70.