Cowen and Company Upgrades Carpenter Technology (NYSE:CRS) To Outperform

Analysts at Cowen have upgraded Carpenter (NYSE: CRS) from Neutral to Outperform based on “powerful de-stock turnaround potential, C13 earnings power of $4 (+/- $0.50; ex pension exp.) & EPS upside from cash deployment.” They add, “We see >20% upside potential relative to the market over 12 months.”

The analysts cited re-stock turnaround projections in their report: “CRS’s NT outlook benefits from de-stock turnaround in jet engine/stainless steel (as does ATI’s) but has the added kicker of likely aero fastener restock (10-15% of sales) by year-end.”

Analysts also predicted that “within the specialty metals group, CRS has the highest potential of approaching prior EPS peak of $4.12 in the coming upturn.” They give 3 reasons for this projection:

- expanded premium melt capacity
- 15% lower share count lowering CRS’s pretax earnings ‘bar’
- prior EPS peak gained little from raw material shortages

Finally, analysts noted that “CRS’s balance sheet ($2.27 of net cash/sh) is the least encumbered by capital obligations among peers” and added, “other obligatgions (i.e., raw materials, leases) are in line w/ peers as a % of market cap.”