Goodrich Taps Allegheny

Specialty materials producer Allegheny Technologies’ (ATI - Analyst Report) thin titanium product was recently chosen by a unit of Goodrich Corporation (GR) for aerospace application. The terms of the deal were not disclosed.

Under the collaboration, Goodrich’s Sensors and Integrated Systems division will use Allegheny’s thin titanium Precision Rolled Strip product for application in heated floor panels for commercial airplanes.

Allegheny’s Grade 2 titanium product is recognized for being significantly thin and wide. It has been rolled to 0.012 inches thin by 42 inches wide. Goodrich will leverage this differentiating capability to make light weight and highly durable heated floor panels installed in commercial aircrafts.

Allegheny is one of the world’s largest and most diverse specialty metals companies. It competes with Carpenter Technology Corp. (CRS - Snapshot Report) among others. Allegheny is a significant supplier to commercial aircraft engine manufacturers and is also expanding its footprint in the commercial airframes market.

Allegheny expects its revenues to grow at least 10% year over year this year. The company is expected to continue to benefit from its new alloys and products, diversified global growth markets and differentiated product mix.

Allegheny's diversified footprint, focus on growing markets, new product/technology development initiative and sustained focus on cost containment strongly place it for future growth. The company should benefit this year from strong demand across aerospace, oil, electrical energy, gas/chemical process and medical industries.

However, Allegheny is contending with cost-pressures associated with raw material inflation. Lower volumes and a decline in prices may also impact the results from the company’s core Flat Rolled Products segment.

Moreover, the soft U.S. and European economies remain as overhangs and the sustained high unemployment levels may impact short-term consumer confidence. We currently have a long-term Neutral recommendation on Allegheny, which is in agreement with a short-term Zacks #3 Rank (Hold).