What happened

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. 

Front view of the left side of an aircraft, highlighting the engine.

Image source: Getty Images.

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

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.

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