Howmet Aerospace (HWM) continues to be positioned for above-industry growth underpinned by strong demand in the commercial aerospace, defense, and gas turbine segments, Morgan Stanley said in a Friday note.

The company can look forward to further margin expansion, with its solid competitive positioning, pricing power and consistent execution, Morgan Stanley analysts said. They noted that the company showcased the potential for its Gas Turbine revenue to double to around $2 billion over the next three to five years, which points to growing demand.

Howmet has taken advantage of its strong financial position to cut interest expense, buy back shares, and grow its Fasteners business through key acquisitions in the industry, the analysts said. The acquisitions are positive for the company as they boost its ability to gain market share and capitalize on existing constraints in capacity, the analysts added.

Howmet's premium valuation is well justified by its differentiated product portfolio, significant pricing power, exposure to several growth opportunities, a capable management team, and a strong balance sheet that allows flexibility in capital deployment, according to the note.

Morgan Stanley maintained the company's stock rating at overweight and raised the price target to $280 from $225.

Price: 250.90, Change: +6.11, Percent Change: +2.50