Bank of America Expects Rockwell Collins to Underperform Peers, Lowers Estimates and PT

In a report published Monday, Bank of America Merrill Lynch analyst Ronald Epstein maintained an Underperform rating on

and lowered the price target from $81.00 to $80.00. Bank of America views Rockwell Collins as the Best-in-Breed electronics supplier and noted the company's past strength in returns and organic growth. Despite past success, the analyst expects the supplier to underperform peers “due to the degradation of earnings quality, increased competition in its avionics business, and headwinds in Government Systems from slowing defense spending trends.” Epstein lowered FY15 and FY16 EPS estimates from $5.15 to $5.05 and from $5.45 to $5.40, respectively. Due to lowered estimates, Bank of America lowered their price objective using a 15.5x one-year forward P/E multiple on CY2015 EPS. Shares of Rockwell Collins Inc. closed at $79.47 on Thursday.