UPDATE: Bank of America Downgrades L-3 Communications Holdings to Underperform on Downside Risk

Bank of America downgraded L-3 Communications Holdings

from Neutral to Underperform and raised the price objective from $76.00 to $77.00. Bank of America noted, "Since the end of 2011, LLL shares appreciated 17%. We see downside risk to current levels as we factor in declining US domestic defense outlook. We expect 2013 sales to decline 3% to $12.7bn and 2014 sales to decline another 3% to $12.4bn. Despite the deteriorating backdrop, we believe that LLL could hold on to operating margins of 10.0%, as management cuts variable costs to respond to lower volumes. In our opinion, management's current cash deployment strategy, which is weighted heavier toward share repurchases, may not be enough to offset earnings contraction." L-3 Communications Holdings closed at $75.13 on Friday.