Amaero Ltd (ASX: 3DA) had what one broker is calling a "spectacular" increase in revenue in FY26, boosting sales from $3.8 million to $18.1 million.
The company produces titanium powders and refractory alloy powders which are in high demand from the advanced manufacturing sector, with Amaero in July announcing a new $6.5 million contract with the US Department of War.
Pitt Street Research has issued a new research note on the company, with a very bullish price target, which I'll get to shortly.
First, let's look at why they like the company.
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Proprietary technology a key to valuation
The Pitt Street analysts say the company's ability to produce the niobium alloy C103 and the titanium alloy Ti64 stand it in good stead as a supplier to the defence and aerospace industries.
They add:
The company has also built capability in parts manufacture, giving it exposure to both the powder and the finished-component ends of the supply chain. Amaero's flagship asset is a commercial-scale plant in McDonald, Tennessee, roughly 25 miles east of Chattanooga, which the company aims to grow into the largest and lowest-cost US domestic producer in its category.
Pitt Street said Amaero has proprietary technology in its EIGA Premium platform, which is able to produce fine, spherical powder particles using a contactless process.
The broker added:
This contactless melting lowers the risk of contamination with impurities, which matters greatly for reactive, high-melting metals such as titanium and niobium and their end applications. Moreover, EIGA also overcomes safety and handling issues as well as conflicts with environmental regulations that other methods come into contact with. But most importantly, the technology does not compromise on the quality of the material. Amaero's version of the technology delivers a yield of spherical titanium suitable for 3D printing of around 50%, roughly double the 25% typical of conventional EIGA, and management believes production costs are roughly half those of competing methods such as Plasma atomisation or spheroidisation.
Pitt Street said Amaero had a large and well-credentialled customer base, with more growth likely to come.
They noted that the US has just passed a US$1.15 trillion defence spending bill, which will flow into defence manufacturing.
They also noted that "there is only one other US company that can atomise refractory powders on a production-scale, yet Amaero's yield is twice that of this competitor and the competitor's lead times often exceed one year''.
Amaero shares looking cheap
Pitt Street has increased their valuation of the company from 62 cents to $1.30 up to 82 cents to $1.71. Amaero is currently valued at $204.9 million, with its shares changing hands for 21.5 cents.
