Howmet Aerospace Shares Fall on SpaceX Competition Concerns

Howmet Aerospace (NYSE: HWM) shares fell sharply in Tuesday trading, declining 6.5% to a low of $238.77 as investors continued to assess the competitive risk from SpaceX's plan to manufacture its own turbine blades and vanes.

SpaceX Overhang Weighs on Sentiment

The pressure on the stock stems from an announcement by Elon Musk that SpaceX intends to bring blade-and-vane casting in-house to accelerate the production of new turbine units. This development has sparked concern that a significant future customer could be removed from the market, potentially weakening the supply-scarcity dynamic that has supported Howmet's premium valuation.

Despite the market's reaction, several Wall Street analysts suggest the fears may be overstated.

• Deutsche Bank analysts argued the competitive risk is less acute than the stock's decline implies, noting SpaceX could still opt to partner with an established manufacturer like Howmet.
• Bernstein maintained its Outperform rating and increased its price target to $328, citing Howmet's long-term supply agreements with major gas turbine makers through 2030 and a planned 38% expansion in blade production capacity.

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Valuation and Investor Positioning

Adding to the headwinds, the stock's high trailing price-to-earnings (P/E) ratio relative to its peers makes it more vulnerable to negative news. The source also noted a pattern of insider sales over the past year with no recent insider purchases, which can weigh on investor confidence.

Furthermore, some investors appeared to be reducing their positions ahead of CEO John C. Plant's presentation at the Jefferies Global Industrials Conference scheduled for Wednesday morning. This pre-event positioning, combined with a weaker broader market where the Dow Jones fell nearly 1.0%, created a challenging environment for the stock, even as its underlying fundamentals from a strong second quarter, including record margins and raised guidance, remain intact.