Credit Suisse Upgrades COL To Outperform, Raises PT To $85

In a report released this morning, Credit Suisse said that it has avoided Rockwell Collins, Inc. COL “due to it higher relative exposure to defense (62%) and the lagging biz jet market (17%).” “But, while defense growth could moderate, most negative news has passed for COL & we think the mkt is now ready to recognize that upside in Comm'l sales & margins drives a favorable risk/reward scenario,” Credit Suisse writes. “Despite a recent run in shares, COL still lags other aero suppliers, trading at an 8% discount to peers v. the 10% historical premium. We are upgrading our rating to Outperform from Neutral. Our new TP is $85 (from $72), based on 17.4x (FY1 10yr avg P/E) our CY'12 est. of $4.91 (Street $4.64) offers 35% upside. Our FY'11-FY'13 est. rise to $4.11/$4.75/$5.40 from $3.85/$4.35/$4.86.” Rockwell Collins closed Thursday at $62.84.