Barclays on Global Aerospace & Defense: Civil - Traffic Better, but Stocks Lagging (PCP, BA, SPR TDG)
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Rating Summary:
13 Buy, 1 Hold, 0 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 12 | New: 30
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Barclays on Global Aerospace & Defense: Civil - Traffic Better, but Stocks Lagging
Analyst, Carter Copeland, said, "In our monthly review of air traffic, after another solid month of traffic growth in June (6.0%), our 2012 RPM growth forecast goes from 4.5% to 4.8%. This upward revision is the result of 1) H1 traffic growth that was consistently stronger than we expected, and 2) early trends in H2, which while showing anticipated deceleration, are holding up better than we expected."
Copeland said that full year 2012 traffic may end up being over 5%, but citing the European situations and oil volatility, he sees upside but cushions for some uncertainty.
Overall, Aerospace stocks have underperformed in 2012, lagging market indices as interest has waned. However, historically, this sector has traded at a premium PE valuation, but recently is have completely eroded. In conclusion, Copeland doesn't feel Aerospace will stay out of favor and sees a reacceleration into 2013. His favorites remain Precision Castparts (NYSE: PCP), Boeing (NYSE: BA), Spirit AeroSystems (NYSE: SPR), and TransDigm Group (NYSE: TDG).
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Analyst, Carter Copeland, said, "In our monthly review of air traffic, after another solid month of traffic growth in June (6.0%), our 2012 RPM growth forecast goes from 4.5% to 4.8%. This upward revision is the result of 1) H1 traffic growth that was consistently stronger than we expected, and 2) early trends in H2, which while showing anticipated deceleration, are holding up better than we expected."
Copeland said that full year 2012 traffic may end up being over 5%, but citing the European situations and oil volatility, he sees upside but cushions for some uncertainty.
Overall, Aerospace stocks have underperformed in 2012, lagging market indices as interest has waned. However, historically, this sector has traded at a premium PE valuation, but recently is have completely eroded. In conclusion, Copeland doesn't feel Aerospace will stay out of favor and sees a reacceleration into 2013. His favorites remain Precision Castparts (NYSE: PCP), Boeing (NYSE: BA), Spirit AeroSystems (NYSE: SPR), and TransDigm Group (NYSE: TDG).
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