Specialty materials company ATI (ATI 0.40%) has been flying high this year, with the shares up more than 40% since Feb. 1.
At least one Wall Street analyst believes that momentum is likely to stall from here. Shares of ATI were down about 10% as of 10:45 a.m. ET Friday after the stock was downgraded to neutral.
A strong surge subsides?
ATI, formerly known as Allegheny Technologies, is a maker of high-performance materials and advanced metal alloys used in aerospace and industrial applications. The company's materials are a key part of the effort to drive fuel efficiency in aerospace and with heavy equipment, offering the strength and durability of steel without the weight.
Investors have flocked into the shares this year on the strength of strong earnings reports in early February and late April. At Northcoast Research, analyst Chris Olin has seen enough. The analyst downgraded ATI to neutral from buy with no price target.
With the stock reaching a multiple to expected earnings unseen in years, and concerns lingering about demand in some industrial subsectors, it appears there might be limits on how high ATI can go for now.
NYSE: ATI
Key Data Points
Is ATI stock a buy?
While the near term is murky, there are a lot of reasons for long-term-focused investors to be intrigued by ATI. We are still in the early stages of a multiyear commercial aerospace ramp-up as airlines look to expand their fleets and replace older, less fuel-efficient models with new jets.
Boeing's current issues have temporarily slowed deliveries but are doing little to stifle demand for new equipment.
For those willing to look past market lulls, there is good reason to hold tight and ignore this turbulence. But given ATI's strong run, Olin is likely correct that now is a good time for those looking to take a profit to cash in, and investors interested in starting a position in ATI might want to hold tight and see where the stock goes from here.
