Credit Suisse raises its rating on Sprint AeroSystems SPR to Outperform from Neutral and raises its target price to $27 from $22 on diminishing overhangs and a greater confidence on outlook for cash flows.
Credit Suisse says, "We are upgrading SPR to Outperform from Neutral on diminishing overhangs including our greater confidence in an inflection to positive FCF in '12, modestly improved execution trends & the absence of BA strike risk with the recent labor deal. In addition, we see SPR's minimal defense exposure (~3% sales) as a
further attraction for investors weary of looming DoD budget cuts. While SPR may experience some incremental execution challenges on new programs in '12 (most risk on BR725, 747-8, & G280 in H1), we think the market will be fairly tolerant at the current relative valuation (peer discount of ~30% on 2012 P/E, 40% relative discount to BA)."
SPR closed at $18.98 per share on Friday.
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