Why Allegheny Technologies Incorporated's Shares Popped 11% Today

Markets Motley Fool

What happened

Continue Reading Below

Shares of Allegheny Technologies Incorporated (NYSE: ATI) jumped as much as 11.1% in trading Tuesday after being upgraded by an analyst at Longbow Research. By 3:40 p.m. EDT shares had slipped slightly but were still trading 9.8% higher on the day.

So what

Chris Olin at Longbow reiterated a buy rating on Allegheny Technologies stock and increased his earnings estimate for 2018 by $0.04 to $1.40 per share. He also maintained a price target for the stock of $24 per share. 

Increased demand for materials that go into jet engines and other aerospace components was the logic behind increasing earnings estimates. And if demand for these products grows 8% to 9% a year from now, it would bode well for metals demand in the next 6 to 12 months.

Now what

Continue Reading Below

The upgrade only mildly changes earnings expectations, but investors must be comforted by the generally bullish note from Longbow. After a year of losing money, a more bullish backdrop would be good for the company. I'd be skeptical buying on an analyst upgrade because the bounce might not last, but watch to see if the increase in demand materializes and revenue growth takes hold in late 2017 and early 2018.

10 stocks we like better than Allegheny Technologies
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Allegheny Technologies wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of August 1, 2017

Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.