Merrill downgrades specialty materials producer Allegheny Technologies (ATI) to neutral from buy on valuation.
Analyst Daniel Roling says the stock has recently achieved and exceeded his $25 price objective. While outlook for Allegheny remains positive, given its exposure to aerospace, military and energy industries, and benefits from J&L Stainless acquisition, he thinks valuation appears full relative to peer group.
He notes market bias has also turned negative, and stainless pricing appears to have flattened out. He looks for continued improvement at Allegheny for both earnings per share growth and balance sheet repair.
However, given current market environment and valuation, Roling thinks the shares are fully valued.