Morgan Stanley Maintains on Rockwell Collins Following Ancticipated Positive Guidance Update
In a report published Wednesday, Morgan Stanley analyst John Godyn maintained Equal-weight on Rockwell Collins (NYSE: COL), following anticipated positive guidance update.
According to the report, F1Q14 tax Adjusted EPS of $0.92 was below the analyst's estimate of $0.95 and cons. of $0.94. Operating income of $180M compared unfavorably to our $201M. Commercial air transport strength was offset by bizjet and Government Systems underperformance.
“Upward guidance revision positive but anticipated,” the report noted. “As we noted in our preview (see 4Q13 Preview: Aftermarket Most Likely to Surprise 1/13/14), we expected an upward revision to F2014 guidance to include ARINC as well as less negative sequestration impact. Government Systems sales are now expected to decline mid single digit % compared to high/mid single % previously. However, the fact that we (and most investors we spoke to, as evidenced in part by the stock's move ahead of EPS) expected guidance to be revised upward this quarter due to the known aforementioned factors rightfully tempered the positive impact of the change on the stock.”
Some highlights from the report included:
-ARINC forms basis of new Information Management Services segment -We remain EW on relatively robust valuation considering COL's organic rev. & EPS growth profile
COL closed Tuesday at $78.40.
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