Zacks.com: Analyst Blog

Domestic (and some foreign) airlines are grounding aircraft, which certainly will have a negative effect on maintenance, repair and overhaul (MRO) revenues. Further, there is fear that the economic malaise evident in the U.S. will become a worldwide phenomenon, and then orders for new aircraft will evaporate -- or at least be stretched out -- ala 9-11.

In addition, the environment for Aerospace/Defense stocks is threatened by the potential, but undeterminable, consequences of the upcoming elections on military expenditures. In light of these conditions, we have continued our Hold opinion for BE Aerospace Inc. (BEAV). Our six-month target price reflects the current climate for these stocks.

Record second quarter net sales of $522.2 million reflect 31.1 percent year-over-year organic growth. The record second quarter operating earnings of $84.3 million increased by 41.7 percent as compared with the second quarter of the prior year; second quarter operating margin of 16.1 percent expanded by 120 basis points compared to the second quarter of the prior year.

Record bookings for the quarter totaled approximately $610 million representing a book-to-bill ratio of approximately 1.2:1; Backlog as of June 30, was a record at approximately $2.4 billion and is up approximately 26 percent compared to June 30, 2007.

On July 28, the company completed its acquisition of Honeywell's (HON) Consumables Solutions distribution business (HCS) for $1.05 billion which consisted of $901.4 million in cash consideration and six million shares of the company's common stock.

The Company raised its full-year 2008 financial guidance by $0.02 per diluted share to approximately $2.37 per diluted share, excluding the impact of HCS transaction related effects; including the impact of the HCS transaction, the financial guidance for 2008 is $2.22 per diluted share.

Read the full analyst report on BEAV