Market Overview

There Are Still Concerns With B/E Aerospace's Business Jet, Helicopter Markets

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B/E Aerospace Inc (NASDAQ: BEAV) on Monday reported its Q3 2016 results, while also announcing that it had entered into an agreement to be acquired by Rockwell Collins, Inc. (NYSE: COL) for $6.4 billion.

Canaccord Genuity’s Ken Herbert downgraded the rating on B/E Aerospace from Buy to Hold, while raising the price target from $60 to $62.

The earnings call was dominated with news of the acquisition, and as part of the transition, “BEAV will be closing its headquarters in Melbourne, FL and CEO Werner Liberherr will be responsible for BEAV as a new segment within COL,” Herbert mentioned.

Q3 Beat

The company reported its Q3 EPS ahead of the estimate and the consensus, with organic revenue growth of 8 percent.

The analyst noted the beat was driven by higher than anticipated growth in commercial aviation, which grew 14 percent during the quarter, offset by an 11 percent decline in the business jet segment sales.

“Although lower volumes for super first class seating products within business jet and civilian helicopter were to blame, book to bill for the overall company in the quarter was ~1.15x, with the backlog up $100M sequentially to $3.4B,” Herbert stated.

Persisting Concerns

The analyst pointed out that there still were persisting concerns regarding the business jet and helicopter end markets, although the growth in commercial aviation was encouraging.

B/E Aerospace raised its FY 2016 revenue growth guidance from 5 percent to 6 percent, while raising the FY 2016 EPS guidance from $3.25 to $3.28.

Latest Ratings for BEAV

DateFirmActionFromTo
Nov 2016Deutsche BankDowngradesBuyHold
Oct 2016Vertical ResearchInitiates Coverage OnHold
Oct 2016Credit SuisseDowngradesOutperformNeutral

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Posted-In: Canaccord Genuity Ken HerbertAnalyst Color Downgrades Price Target Analyst Ratings

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