CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:
Our 12-month target price of $290, up $15, reflects a 17.5x multiple of projected 2025 EPS, slightly above GD’s historical forward average. We think a modest premium is reasonable given what should be an improving operating margin environment. We cut our 2024 EPS estimate by $0.06 to $14.61 and 2025’s by $0.04 to $16.59. Q1 EPS of $2.88 vs. $2.64 missed the consensus view by $0.06. Operating margins of 9.7% rose 20 basis points vs. the year-ago quarter and backlog rose 4% from year-end 2023. There is light at the end of the tunnel for the G700, which obtained certification in late Q1, but too late to make any deliveries in Q1. Nonetheless, GD is maintaining its guidance of 50-52 G700 deliveries in 2024. On a positive note, Combat Systems’ book-to-bill was a healthy 1.6:1 and we think demand for GD’s products in this end market should be strong, especially in Europe. Shares yield 2.0%, and we think the implied 2024 dividend payout ratio of 39% is defendable.