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Goldman Sachs Upgrades Arconic After Q1 Print, Update On Upcoming Business Split

Priya Nigam

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.

The Analyst

Matthew Korn upgraded Arconic from Neutral to Buy and raised the price target from $21 to $26.

The Thesis

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. 

Price Action

Arconic shares were up 1.75 percent at $21.82 at the time of publication Thursday. 

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Latest Ratings for ARNC

Date Firm Action From To
May 2019 Upgrades Neutral Buy
Jan 2019 Downgrades Overweight Neutral
Dec 2018 Upgrades Neutral Buy

View More Analyst Ratings for ARNC
View the Latest Analyst Ratings

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