BUY OR SELL-When will Goodrich see aerospace upturn?

*Goodrich speed sensors recommended for use on planes

*Bull says new-plane exposure positions company for upturn

*Bear cites weak end markets

By Karen Jacobs

ATLANTA, Aug 12 (Reuters) - Could trouble with a rival's product spell good news for Goodrich Corp (GR.N)?

The supplier of aircraft parts scored a victory in recent weeks when plane maker Airbus (EAD.PA) started urging airlines to switch a majority of speed sensors on about 200 long-haul jets to Goodrich parts from Thales (TCFP.PA) models.

Airlines have responded by switching the sensors, which are known as pitot tubes. For example, Delta Air Lines Inc (DAL.N) and US Airways Group Inc (LCC.N) told Reuters they are replacing Thales pitot tubes on Airbus planes with Goodrich models.

A RECOVERY PLAY

"I think it's great public relations for Goodrich, but not necessarily a huge economic impact," said Standard & Poor's aerospace and defense analyst Richard Tortoriello.

But he cites other reasons to bet on Goodrich.

"When planes get taken out of service by airlines because their air traffic is not strong, the older planes get taken out of service first because they are less fuel efficient. That means that Goodrich's business in the aftermarket parts and service has been less affected than other MRO (maintenance repair and overhaul) providers.

"Goodrich is more exposed to newer planes in terms of their parts and aftermarket service. It's kinda a little bit of a leveraged play, Goodrich is on a recovery in the aftermarket," Tortoriello said.

He added: "The defense revenues have been holding up, which means for now that Goodrich is in programs that are funded. If you look out to the long-term, defense spending as a whole is going to slow, and I would be looking at Goodrich more as a commercial aerospace play going forward than a defense play."

WEAKNESS STILL AHEAD

Societe Generale has a "sell" rating on Goodrich. In a July 24 research note, analysts Colin Campbell and Zafar Khan wrote that "end markets remain weak" with the exception of defense and space.

They added: "We assume that 2010 and 2011 see lower EBIT (earnings before interest and taxes) due to weak civil OEM (original equipment) production. The group is well placed for the recovery, which we expect in 2012."

Goodrich shares were up 99 cents, or 1.8 percent, to $55.88 on Wednesday afternoon in New York Stock Exchange trading. (Editing by Gerald E. McCormick)