Howmet Aerospace (HWM) delivered another beat-and-raise quarter, with investors continuing to focus on capacity additions within its Engine Products segment as industrial gas turbine demand improves and commercial aerospace and defense markets remain strong, RBC Capital Markets said in a Friday note.

The investment firm said that it continues to see upside to its estimates on the Engine Products segment with LEAP/GTF engine transition, yield improvements, spares demand, pricing, as well as defense upside.

RBC said management remains open to incremental mergers and acquisitions, which it believes would be well received by investors given the company's "best-in-class" operations. The firm added that capital spending remains elevated this year, with higher capex expected in 2027.

Howmet expects to reduce net leverage to about one times by the end of 2026, providing additional flexibility for share repurchases and potential acquisitions, according to the note.

RBC raised its price target to $350 from $325 and maintained its outperform rating.

Shares of Howmet were down 2% in Friday afternoon trading.

Price: 283.89, Change: -5.69, Percent Change: -1.96