KeyBanc Downgrades Esterline Tech (ESL) to Hold Ahead of Q4 Report

December 4, 2012 7:38 AM EST Send to a Friend
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Price: $110.62 -0.47%

Rating Summary:
    6 Buy, 3 Hold, 1 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 35 | Down: 22 | New: 12
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KeyBanc downgraded Esterline Tech (NYSE: ESL) from Buy to Hold ahead of the Company's fiscal 4Q12 earnings release scheduled for Thursday after the market close.

The firm comments, "Since the end of August, ESL shares have performed well and are up 14% compared to the S&P 500 and its KBCM Commercial Aerospace peers, which are up 0% and 5.4%, respectively, over the same time period. Valuation may appear attractive, but as we detail below, limited visibility in the face of the stock's recent performance gives us cause for concern; we believe near-term upside will be limited."

ESL management is expected to issue its initial full year FY13 outlook on its upcoming earnings call. And although management indicated qualitatively on its fiscal 3Q12 call that improved financial performance would take place in the coming year, the firm is taking a cautious approach given the recent share performance coupled with the following factors: 1) the second Saudi Arabian C- 130 order tranche has still not materialized, which, in our view, introduces potential margin risk in the Avionics segment in FY13; 2) growing defense revenues organically in FY13 may be a tall order given current contracting paralysis and lower op tempo; and 3) lingering program disruptions (i.e., A380, F-35, etc.) may adversely impact 1H13.

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

Shares of Esterline Tech closed at $60.36 yesterday.




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