UPDATE: UBS Downgrades Triumph Group (TGI) to Sell

(Updated - July 14, 2015 9:59 AM EDT)

UBS downgraded Triumph Group (NYSE: TGI) from Neutral to Sell with a price target of $58.00 (from $61.00). Analyst David E. Strauss doesn't think the stock is as cheap as it appears, given difficult growth.

"We see downside for TGI on still challenging growth outlook along with weak cash conversion. While new management could be a catalyst, we don't see a quick fix. TGI appears attractive on valuation, however a significant portion of its earnings are noncash, principally amortization of contract liabilities and pension income. On comparable basis, we estimate TGI trades at ~15x FY16 EPS, just slightly below its peers while it looks more expensive on FCF basis," said Strauss.

"We continue to see a difficult growth profile with further risk on 747/C-17/G450/G550 along with likely delay for Global 7000/8000, one of TGI's few growth opportunities. With weak cash flow and already relatively high leverage (2.4x net debt/EBITDA), TGI has limited ability to augment EPS growth with aggressive capital deployment. We see FCF well below net income for the next several years on Gulfstream, 747-8 and increasing cash taxes," added the analyst.

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

Shares of Triumph Group closed at $64.11 yesterday.

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