UPDATE: D.A. Davidson Reiterates Buy Rating, Raises PT on B/E Aerospace Following Q2 EPS Report

In a report published Wednesday, D.A. Davidson analyst JB Groh reiterated a Buy rating on

, and raised the price target from $75.00 to $88.00. In the report, D.A. Davidson noted, “B/E Aerospace reported Q2 EPS of $0.89, ahead of our $0.84 estimate and the Street mean of $0.85. A lower tax rate was a ~$0.01 tailwind in the quarter versus our model. Results also included $0.02 in AIT costs in consumables. Revenues increased 10.7% to $850 million (~60% from new build a/c); above our estimate of $844 million and the Street consensus of $843 million. Overall operating margins were up 80bp year-over-year and 50bp sequentially to 18.7%. Free cash flow was $39.6 million ($0.38 per share) as capex levels remain high due to the large backlog. Annual FCF guidance of 65% of net earnings was decreased slightly from 70%. B/E Aerospace had record new orders of $880 million in the quarter. Total backlog came in at $3.8 billion (~$8.4 billion including awarded but unbooked), while book-to-bill for the quarter was 1.04 to 1. We continue to expect a book-to-bill of >1 for 2013.” B/E Aerospace closed on Tuesday at $69.78.