Arconic Inc (NYSE: ARNC) held its first-quarter conference call Tuesday, during which management provided a host of new information and more clarity on the company’s path forward, both operationally and structurally, according to Goldman Sachs.
Matthew Korn upgraded Arconic from Neutral to Buy and raised the price target from $21 to $26.
Arconic not only delivered a high-quality first-quarter beat, but also raised its full-year EPS and free cash flow guidance, Korn said in a Thursday note. (See his track record here.)
The metals manufacturer raised its 2019 EPS guidance from $1.55-$1.65 to $1.75-$1.90. This translates to an increase of 23 cents at the midpoint.
The upward revision reflects the impact of a lower share count as the company completes its accelerated buyback program, Korn said. It also reflects benefits from the company’s cost savings and productivity improvement initiatives, he said.
The call provided more clarity into Arconic’s planned split into two public companies, the analyst said.
Arconic said it expects the split to be completed by the second quarter of 2020.
Although there are challenges ahead, Arconic has given investors a clearer idea of its earning potential in its current state and what it considers the optimal structure for its businesses, according to Goldman Sachs.
Arconic shares were up 1.75 percent at $21.82 at the time of publication Thursday.
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