Canaccord Genuity Cuts Price Target on CPI Aerostructures (CVU) as A-10 Outlook Remains Uncertain

Canaccord Genuity maintained a Buy rating on CPI Aerostructures (NYSE: CVU), and cut the price target to $10.00 (from $12.00), following the company's 4Q. While the uncertainty surrounding the A-10 program is likely to continue well into 2016, Canaccord Genuity agrees the fundamentals with this program are improved, and the initial 2016 guidance reflects much of the potential downside with the program. CVU guided to pre-tax income of $9.8M-$10.5M, and taxes at ~37%. Note that the company does not provide specific free cash flow or EPS guidance. CVU reported 4Q EPS of $0.08, which was lower than expected.

Analyst Ken Herbert commented, "CPI Aerostructures (CVU) reported Q4/15 and full year EPS of $0.08 and $0.58, respectively. While this was lower than we had expected, gross margins excluding the A-10 were 21.1% and 22.6% for the quarter and full year 2015, respectively, which we believe is a positive. Revenues in the quarter benefited (~$2M) form a slight pull-forward of some E-2D associated sales to Northrop. We continue to believe CVU represents an attractive stock that is currently pricing in a much more bearish outlook, especially for the A-10, than we believe is justified."

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

Shares of CPI Aerostructures closed at $6.93 yesterday.

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