However, some analysts argued that the weakness was a buying opportunity, and Robert W. Baird’s Peter Arment and Asher Carey agree. They reiterated an Outperform rating and $56 price target on Textron Thursday.
They write that despite soft margins in the first quarter, the outlook for the full year remains intact. They see operational improvements through the rest of the year, and Textron Aviation returning o growth in 2018.
More detail from the note:
While industry survey data shows buying interest in Bizjets has improved (backlog flat in 1Q17) and pricing has firmed up, we do not expect to see momentum for core platforms without some positive uplift from tax reform. Additionally, getting the Longitude aircraft across the certification goal line in 4Q17 is an import step to Textron Aviation returning to growth in 2018. In the near term, the ramp-up continues for the Latitude program and the Scorpion jet commences testing in the Air Force light attack platform evaluation this summer. It remains early days for the Scorpion on testing, but the positive is the bulk of the $50 million in costs will be felt in Textron Aviation margins during 1H17.
That said, they expect the shares to stay range-bound in the near term, until margins can begin to rebound.
The shares are up 0.4% to $46.17 at recent check.