- Raytheon (RTN -2.7%) is lower after Credit Suisse (SIX:CSGN) downgrades shares to Neutral from Outperform with a $219 price target, trimmed from $250, as part of a wider downgrade of the defense sector whose stock gains the firm thinks have topped out.
- While RTN has a number of solid opportunities in front of it, including the new Long Range Stand-off Weapon and hypersonics, the current share price largely reflects this upside, says Credit Suisse analyst Robert Spingarn.
- "After six consecutive years of relative outperformance, defense hardware stocks have reached valuation multiples not seen since 2001," Spingarn writes. "But whereas in 2001 those multiples were deserved in light of the beginning of a major land war and the end of an industry consolidation wave, today's market appears to have gotten ahead of itself."
- Along with the RTN downgrade, Spingarn cuts price targets for Northrop Grumman (NOC -2.3%), General Dynamics (GD -0.6%), Lockheed Martin (LMT -2%), Harris (HRS -2.2%), Huntington Ingalls (HII -1.1%) and L-3 Technologies (LLL -1.1%).
- Spingarn reiterates Outperform ratings on HRS, HII and LLL, saying they "trade at reasonable valuations with clear program visibility and international exposure."
- ETFs: ITA, XAR, PPA
- Now read: ITA: Is Its Risk Underpriced?
Original article