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【出版时间及名称】：2010年4月美国航空与国防行业研究报告
【作者】：摩根大通
【文件格式】：pdf
【页数】：45
【目录或简介】：
We are updating the allocation of points in our “Balance of Power” short-term
outlook. The total number of points is 1,800: 100 for each stock in our coverage
universe. We summarize our thoughts on the rankings below:
• Defense momentum should continue through earnings. The four largest
defense primes have outperformed the S&P 500 by 6% YTD, and we believe
these stocks can keep up the momentum through earnings with clean quarters
and few changes to the 2010 outlook. In addition, we are looking for signs that
managements may begin to return cash to shareholders more aggressively. RTN
is increasing its dividend by 21% and we believe LMT and NOC could show
momentum on share repurchases. We are keeping LMT in the top large cap spot
at 125 despite more expected headlines on F-35 and raising RTN to 115 (+5).
• Commercial aero tougher to call into the quarter, but on balance we’re a
bit cautious. On the plus side, the OE outlook improved materially last month
and next year’s consensus estimates look way too low, particularly for BA, SPR,
and PCP; we are far above consensus for all three. However, several of the
commercial stocks have had big moves recently, and we see two risks to the
outlook: potential disappointing news on the 747-8 and/or 787 development
programs and earnings misses in Q1 itself. Consensus estimates for the March
quarter look too high for BA, PCP, and perhaps UTX. Though it is a higher-risk
proposition given its recent earnings track record and development program risk,
SPR (115) could have a better earnings profile when considering both the shortand
intermediate-term outlooks than some of the others. Estimates for Q1 look
reasonable, and we see potential for increased 2010 guidance and 2011 estimates
based on higher 737 margins. On the other hand, we are lowering UTX to 85
and keeping BA at 75. In both cases the Street has not heeded guidance for a
weaker Q1, and we don’t see much management could say to incrementally
improve the outlook presuming that the substantial 777 rate-driven increases to
the BA 2011 EPS outlook are already in the stock (as they are not even close to
recognized in consensus expectations).
• Other thoughts on the rankings. ATK is our top-ranked SMid stock at 120 this
month, in part because we believe that President Obama’s NASA speech on
April 15 could actually be a “buy the news” event. We have raised SAI to 115
(+15), tied with SPR. The stock was the worst performer in our group last month
following disappointing earnings, but we sense that buyside interest could start
to materialize. Bombardier (105) also traded off due to disappointing March
earnings, and we don’t see much near term besides positive Aero orders
(China?) as catalysts. We have lowered HRS to 70 (-20), as while Q3 itself
should be solid, visibility on next year’s RF outlook is low and FY11 guidance
could disappoint relative to a consensus outlook for nearly flat EPS.
• Please see the body of our note for our price targets, methodologies, and
risks, as well as an aerospace/defense catalyst calendar.
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