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SpaceX (SPCX) has just delivered a fresh shock to Howmet Aerospace (HWM), putting one of the company's most closely watched growth opportunities under the spotlight. Shares of Howmet plunged 7.5% after CEO Elon Musk revealed that SpaceX plans to bring the casting of natural-gas turbine blades and vanes in-house, arguing that the move could accelerate the deployment of new turbines by as much as 18 months.
The announcement is particularly significant because Howmet has built a powerful position in the highly specialized turbine-blade market. The company reportedly holds more than 50% of the global market for industrial gas-turbine blades, while its gas-turbine revenue surged 38% in the latest quarter. The business has benefited from a surge in demand as artificial intelligence (AI) data centers require enormous amounts of electricity and utilities race to expand power-generation capacity.
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Musk's move, however, could challenge that favorable backdrop by signaling that major power users may increasingly seek to bypass supply-chain bottlenecks through vertical integration. Plus, SpaceX's planned foundry could eventually reduce its reliance on specialized suppliers and potentially encourage other large customers to consider similar strategies.
Still, the selloff may have moved faster than the fundamental threat. Bernstein believes SpaceX's initiative is primarily about vertical integration and sees limited risk to Howmet. Citi has likewise called the decline a potential buying opportunity. Now, it remains to be seen whether SpaceX's ambitions represent a lasting threat to Howmet's growth story or if the selloff was just an overreaction.
Howmet Aerospace is a global provider of advanced engineered solutions serving the aerospace, defense, gas turbine and transportation industries. Headquartered in Pittsburgh, Pennsylvania, the company specializes in mission-critical engine components, fastening systems, airframe structural components, and forged aluminum wheels, with its technologies designed to improve aircraft and commercial vehicle performance and efficiency.
Howmet has built a particularly strong position in aerospace and gas-turbine components, areas that have benefited from rising aircraft production and growing power-generation demand. Howmet currently boasts a market capitalization of $101.2 billion.
Howmet has delivered strong gains over the longer term, but the stock has entered a sharp correction lately. HWM stock closed Aug. 31 at $244.95 per share, down 7.5% intraday, fueled by Musk revealing that SpaceX plans to manufacture gas-turbine blades and vanes in-house.
Despite the recent weakness, however, Howmet remains comfortably higher for the year. HWM stock has gained 26% year-to-date (YTD) and 48% over the past year. The stock also reached a 52-week high of $310 on Aug. 6 following the company's stronger-than-expected second-quarter results and a significant increase in its full-year outlook. Still, the stock is down about 16% from that peak.
HWM stock currently trades at 47.8 times forward earnings, which is a premium compared to industry peers.
Howmet Aerospace reported its Q2 2026 results on Aug. 6, delivering another strong quarter of double-digit growth and raising its full-year outlook. The company generated $2.54 billion in revenue, up 24% year-over-year (YOY). Organic revenue growth was 21%, indicating that most of the expansion was driven by underlying business growth rather than acquisitions. Operating income also increased 36% YOY to $711 million, compared with $521 million a year earlier, while operating margin expanded 250 basis points to 27.9% from 25.4%.
Adjusted EBITDA climbed 39% to $817 million, while adjusted EBITDA margin expanded 340 basis points to 32.1% from 28.7%. Adjusted EPS also jumped 46% YOY to $1.33, up from $0.91 in Q2 2025. Free cash flow increased 39% to $479 million, compared with $344 million a year earlier.
Growth was broad across Howmet's key markets. Engine Products revenue increased 32% to $1.37 billion, while Fastening Systems revenue rose 37% to $589 million. Engineered Structures was the exception, with revenue declining 13% to $269 million, partly because of the Savannah disk-forging divestiture and product rationalization. Forged Wheels revenue increased 14% YOY to $316 million.
The underlying demand picture was strong. Commercial aerospace grew 28% YOY, defense aerospace increased 11%, and gas turbines surged 38% during the quarter. That gas-turbine growth is especially relevant to the current investment debate surrounding SpaceX's plans to manufacture turbine blades internally.
Following the strong quarter, Howmet raised its full-year 2026 guidance. Revenue is now expected between $10 billion and $10.1 billion with a $10.05 billion midpoint, representing a $400 million increase in the baseline forecast from previous guidance. Adjusted EBITDA guidance was raised to $3.21 billion to $3.25 billion with a $3.23 billion midpoint, up $170 million from the previous baseline.
Adjusted EPS guidance increased to $5.23 to $5.31 with a $5.27 midpoint, $0.33 above the previous baseline. Free cash flow guidance also climbed $150 million to $1.9 billion at the midpoint, or a range of $1.85 billion to $1.95 billion.
For Q3, Howmet expects revenue of $2.565 billion to $2.585 billion, adjusted EBITDA of $825 million to $835 million, adjusted EPS of $1.34 to $1.36, and an adjusted EBITDA margin of roughly 32.2% to 32.3%.
On the other hand, analysts anticipate EPS to rise 41% YOY to $5.33 in fiscal 2026, then climb 17% to $6.22 in fiscal 2027.
What Do Analysts Expect for Howmet Stock?
Bernstein recently maintained an "Outperform" rating on HWM stock with a $328 price target, arguing that SpaceX's turbine-blade initiative is more likely to represent vertical integration to support its own power needs than an attempt to become a major supplier of turbine components. Bernstein therefore viewed the sharp decline in Howmet shares as a potential buying opportunity.
Citi was similarly constructive, maintaining a "Buy" rating and a $329 price target while placing Howmet on a 30-day upside catalyst watch. Citi's view is that the underlying demand for Howmet's gas-turbine components remains strong and that SpaceX's plans do not immediately undermine the broader supply-demand dynamics supporting the business.
HWM stock has a consensus "Strong Buy" rating overall. Out of 23 analysts covering the stock, 19 recommend a "Strong Buy," one suggests a "Moderate Buy," and three analysts have a "Hold" rating. The average price target of $332.57 indicates potential upside of 28% from current levels, while the Street-high target price of $375 suggests 45% potential upside from here.
On the date of publication, Subhasree Kar did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
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