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UPDATE: Credit Suisse Downgrades Precision Castparts On Reduced Visibility, Absence Of Near-Term Catalysts


In a report published Friday, Credit Suisse analyst Robert Spingarn downgraded the rating on Precision Castparts Corp. (NYSE: PCP) from Outperform to Neutral, and lowered the price target from $289.00 to $223.00.

In the report, Credit Suisse noted, “While we think PCP is finally turning a corner from a messaging perspective, we will not know for sure until formal FY'16 guidance is introduced in May, and only then if guidance seems achievable. Meanwhile, we cannot justify a premium multiple given the reduced growth into FQ4 & FY'16 and uncertainty as to whether these revenues shortfalls are structural or simply the confluence of several inconveniently-timed delays. Thus, our newly lowered CY'15 estimate of $13.87 (based on FY'16 of $14.20 from $15.95) at 16.1x, yields a TP of $223. A market multiple may be a ceiling for a while given reduced visibility and lower (though perhaps temporary) market confidence between now and May's guidance introduction. Short of a meaningfully accretive M&A deal or an ASR (not expected), we see no particular positive catalyst between now and then. Further, unless the Q4 result or the May guidance provide an assurance of newfound conservatism, this is now clearly a show-me stock, likely range-bound a quarter or two into FY16, or until the market becomes comfortable that guidance is a floor. Based on our new TP, we downgrade to Neutral.”

Precision Castparts closed on Thursday at $208.91.

Latest Ratings for PCP

Jan 2016Gabelli & Co.DowngradesBuySell
Oct 2015JefferiesMaintainsHold
Oct 2015Wells FargoDowngradesOutperformMarket Perform

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Posted-In: Credit Suisse Robert SpingarnAnalyst Color Downgrades Analyst Ratings

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