Air Capital Insider

Analyst sees piston, turboprop markets softening for Textron

The Wichita Eagle

A Wells Fargo analyst thinks sales of turboprops and piston airplanes could be headed lower for Textron Aviation, based on recent comments from glass cockpit makers Garmin and Rockwell Collins.

Sam Pearlstein, senior analyst for Wells Fargo Securities, said in a note to investors Monday that with Garmin Aviation announcing last Thursday expectations for a flat year-over-year because of general aviation weakness as well as Rockwell’s comments last month about light business jet and turboprop weakness, “we would expect deliveries to be down some this year from 2014,” Pearlstein wrote.

“As a result, we are trimming our piston and turboprop sales estimate for 2016 and this reduces our 2016 EPS estimate to $2.85 from $2.95,” he added.

Pearlstein noted that Garmin provides avionics to Cessna and Beechcraft piston aircraft including Bonanzas, Barons and 172 Skyhawks. Rockwell provides avionics for the King Air.

But, Pearlstein wrote, he expects better performance from the business jet side of Textron Aviation.

“We continue to expect higher volume on business jets (from a full year of Latitudes) at high incremental margins to drive the double-digit earnings growth,” he wrote.

Textron Inc. plans to release its third quarter 2015 earnings on Oct. 27.

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