Needham & Company Lifts Numbers on Cubic (CUB) on 'Strong' Q2

May 6, 2013 7:41 AM EDT
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Price: $48.30 --0%

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    8 Buy, 1 Hold, 0 Sell

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Needham & Company boosted its price target on Buy-rated Cubic (NYSE: CUB) from $50 to $53 on "much stronger than expected" second quarter results.

Analyst James Ricchiut comments, "CUB posted much stronger than expected FQ2 revenues and EPS, driven by a stronger performance from Cubic Transportation Systems (CTS) and surprising growth in the Defense business. Revenues came in 9% above consensus, while EPS blew past Street estimates, reflecting a larger-than-expected annual incentive payment received from CTS tied to ridership usage in London. Total funded backlog was down 4% q/o/q, including a 13% decline in consolidated defense backlog (but excludes over $300M of recent IDIQ awards for virtual training related to the new Littoral Combat Ship)."

He continued, "Operating margins in the defense business are likely to trend higher over the balance of F13 while the unusually strong Transportation margins are likely to return to FQ1 levels before trending upward in F14 as large projects like Chicago complete the delivery phase next year. CUB is demonstrating impressive profitability in what has always been viewed as a transition year, although we believe the company has the potential to continue delivering upside earnings surprises over the next 18 months."

The firm rasied FY 2013 EPS from $2.65 to $2.90 and FY14 EPS from $3.10 to $3.15.

For an analyst ratings summary and ratings history on Cubic click here. For more ratings news on Cubic click here.

Shares of Cubic closed at $45.59 yesterday.

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