Bank of America: United Technologies is an Underrated, High Quality Name
In a research report published today, Bank of America says that United Technologies Corporation (NYSE: UTX) has been added to the US 1 list.
Bank of America commented in the report, “We view UTX as an undervalued high quality name. UTX typically trades close to 17X on a 1 year forward P/E Basis. Current valuation puts it at 14.4X our 2012e, a discount of 2.6 turns. Shares have lagged since the GR acquisition announcement, but we expect the stock to rebound once the market begins to value UTX on 2013 earnings. Additionally, UTX is poised to benefit from the commercial OE upcycle, given the success of Geared Turbofan engine, and to benefit from an economic recovery as we expect the company's significant restructuring efforts in the past few years to pay off through strong operating leverage as volumes return. Our $110 PO is based on a DCF analysis using a discount rate of 9.7% and an longterm-growth rate of 2.7%. This implies 31.7% upside from current levels.”
Bank of America reiterates its Buy rating on United Technologies, which closed Friday at $83.50.
