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Howmet (NYSE:HWM) is the top stock pick in the aerospace and defense industry for 2024, analysts at financial-services firm Morgan Stanley said on Wednesday.
“Aerospace is an attractive sector in 2024, but we are more selective on stocks due to valuation, capital return potential and execution risks,” Kristine Liwag, analyst at Morgan Stanley, said in a December 20 report.
Howmet (HWM), which makes parts for aircraft and aluminum wheels for heavy trucks, has room to expand its valuation multiple, according to the bank’s analysis. The company, which was spun out of Alcoa (AA) in 2016, also operates in what’s known as the aftermarket for parts and maintenance services, which provides steady revenue.
Heico downgraded
Heico (NYSE:HEI) was downgraded to Underweight from a previous investment rating of Equal Weight by Morgan Stanley. The aerospace and defense company is overvalued compared with peers, the bank’s analysts said.
Spirit AeroSystems upgraded
Conversely, Spirit AeroSystems (NYSE:SPR) was upgraded to Equal Weight from Underweight previously, also based on relative value. Spirit (SPR) supplies the main sections of airplanes for companies such as Boeing (BA) and Airbus (OTCPK:EADSY) (OTCPK:EADSF).
