ATI shares surge on earnings beat, bullish 2026 guidance
Specialty metals manufacturer forecasts 27% EPS growth amid robust aerospace and defense demand
Allegheny Technologies Incorporated shares climbed in Tuesday trading after the specialty metals manufacturer reported fourth-quarter earnings that exceeded expectations and issued robust 2026 guidance that projects significant earnings growth.
The Pittsburgh-based company posted adjusted net income of $130 million, or $0.93 per share, for the fourth quarter of 2025, surpassing analyst projections that ranged from $0.87 to $0.89 per share. Revenue reached $1.18 billion for the quarter, matching the higher end of market expectations. The strong performance capped a fiscal year in which the company repurchased $470 million worth of shares and generated operating cash flow of $614 million, a 51% increase from the prior year.
Looking ahead to 2026, ATI issued guidance that signals accelerating momentum. The company projects adjusted earnings per share between $3.99 and $4.27, representing approximately 27% growth at the midpoint compared to fiscal year 2025 adjusted EPS of $3.24. Management also forecast adjusted EBITDA in the range of $975 million to $1.025 billion for the coming year, driven by improved sales mix and higher volume in key markets.
The aerospace and defense sector continues to drive ATI's performance, accounting for 68% of fourth-quarter sales, up from 65% in the same period last year. For the full fiscal year 2025, aerospace and defense also represented 68% of total sales, highlighting the company's strategic positioning in a market benefiting from increased commercial aircraft production and defense spending. According to the company's earnings release, High-Performance Materials segment achieved 9% year-over-year growth in airframe sales.
"We exceeded the upper range of our fourth quarter and full-year earnings and cash flow guidance," ATI executives stated, noting that adjusted free cash flow for fiscal year 2025 reached $380 million, representing a 53% increase over fiscal year 2024. The company's strong cash generation supported the aggressive share repurchase program, which returned significant capital to shareholders throughout the year.
Analysts have responded positively to ATI's results and outlook, with several firms raising price targets ahead of the earnings announcement. JPMorgan increased its price target to $135 from $118 while maintaining an "Overweight" rating as part of its 2026 aerospace and defense outlook. KeyBanc Capital Markets similarly raised its target to $132 from $120, keeping an "Overweight" rating and citing anticipated sequential growth in higher-margin jet engine products.
The consensus price target among analysts stands at approximately $133, suggesting substantial upside from current levels around $121. ATI currently trades with a forward price-to-earnings ratio of 31.15, reflecting investor confidence in the company's growth trajectory despite its premium valuation compared to broader market multiples.
ATI's transformation from a commodity-focused metals producer to a specialized materials company serving high-value aerospace, defense, and energy markets appears to be gaining traction. The company's focus on titanium and nickel-based alloys engineered for rigorous industry standards has positioned it to benefit from secular growth trends in commercial aviation and military applications.
Looking forward, investors will be monitoring execution on the company's growth initiatives, particularly its ability to expand margins in the aerospace and defense segments while maintaining operational discipline. The company's guidance implies continued strength in commercial aircraft build rates and defense procurement, though any deceleration in these end markets could present risk to the outlook.
With shares having reached a 52-week high of $127.11 earlier in the year and currently trading above both 50-day and 200-day moving averages, ATI has established itself as a strong performer in the industrial materials sector. The combination of earnings momentum, shareholder returns through buybacks, and exposure to growing aerospace and defense markets has positioned the company for what analysts anticipate will be another year of robust performance in 2026.