March 9 Sanford C. Bernstein cut its price
target on defense company General Dynamics (GD.N) to $45 from
$61, partly due to a weaker outlook for its business jet making
The brokerage also cut its target price on United
Technologies Corp (UTX.N) to $46 from $51, citing its critical
end markets in the near term, with the greatest risk likely to
come in 2010.
For United Technologies, the impact of business jet
weakness is spread over a much broader base of business,
analyst Douglas Harned said in a note to clients. He has a
"market perform" rating on the stock.
On General Dynamics, the analyst said: "We believe that the
company's outlook for business jet deliveries is still too
The cut in business jet delivery forecast will prevent the
stock from capturing the benefits of its defense businesses, he
Last week, the company's Gulfstream unit lowered its
production rates for large-cabin aircraft to 73 from 94 and
mid-size cabin aircraft to 20 from 34 to balance it over 2009
"Although these production rate cuts are designed to enable
balanced production rates over 2009 and 2010, we are skeptical
that these rates will hold," Harned noted.
The analyst noted that the early drop in production rates
suggests a more severe downturn than in the past cycles.
Beyond 2010, he expects the recovery to be slow as it will
take time for business jets to be reaccepted in a corporate
Harned maintained his "market perform" rating on the stock
as he saw more production cuts at Gulfstream.
(Reporting by Dhanya Ann Thoppil in Bangalore; Editing by