Auriga Maintains a 'Buy' on Spirit AeroSystems (SPR); Immune from Broader Defense Worries
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Price: $31.81 +0.86%
Rating Summary:
18 Buy, 14 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 12 | New: 13
Rating Summary:
18 Buy, 14 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 12 | New: 13
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Auriga maintains a 'Buy' on Spirit AeroSystems (NYSE: SPR) price target of $30.00.
Analyst, Mike Callaghan, said, "In the past few weeks, aerospace and defense stocks have pulled back sharply as concerns over defense budgets have escalated while we approach the sequestration deadline. While we find the pullback reasonable for most A&D names on our list, we point out SPR has less than 1% total revenue exposure to defense markets. More importantly, its primary revenue drivers are related to commercial production rates which are expected to rise despite uncertainty in Europe (or defense budgets), and are supported by more than seven years of backlog at major OEM's (Boeing and Airbus). Tornado Impact Minimal to Long-term Story. On April 14, a tornado damaged portions of Spirit's primary Wichita facility, which houses its 737 production. Since the impact, shares have traded flat to down amid uncertainty regarding production capacity and broader market weakness. That said, we expect the storm related write-off to be minimal when the company reports the financial impact in tandem with its second-quarter results, particularly as we were impressed with management's response as the company returned to full operations within 10 days of the event (on April 24). Moreover, we suspect the quick response will minimize the income statement impact, as the company's insurance coverage should cover both repairs and lost productivity."
For an analyst ratings summary and ratings history on Spirit AeroSystems click here. For more ratings news on Spirit AeroSystems click here.
Shares of Spirit AeroSystems closed at $22.88 yesterday.
Analyst, Mike Callaghan, said, "In the past few weeks, aerospace and defense stocks have pulled back sharply as concerns over defense budgets have escalated while we approach the sequestration deadline. While we find the pullback reasonable for most A&D names on our list, we point out SPR has less than 1% total revenue exposure to defense markets. More importantly, its primary revenue drivers are related to commercial production rates which are expected to rise despite uncertainty in Europe (or defense budgets), and are supported by more than seven years of backlog at major OEM's (Boeing and Airbus). Tornado Impact Minimal to Long-term Story. On April 14, a tornado damaged portions of Spirit's primary Wichita facility, which houses its 737 production. Since the impact, shares have traded flat to down amid uncertainty regarding production capacity and broader market weakness. That said, we expect the storm related write-off to be minimal when the company reports the financial impact in tandem with its second-quarter results, particularly as we were impressed with management's response as the company returned to full operations within 10 days of the event (on April 24). Moreover, we suspect the quick response will minimize the income statement impact, as the company's insurance coverage should cover both repairs and lost productivity."
For an analyst ratings summary and ratings history on Spirit AeroSystems click here. For more ratings news on Spirit AeroSystems click here.
Shares of Spirit AeroSystems closed at $22.88 yesterday.
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