Analyst cuts Cytec, Hexcel profit estimates

15 April 2008 17:22  [Source: ICIS news]

NEW YORK (ICIS news)--Investment firm Credit Suisse lowered on Tuesday profit estimates on US advanced composite makers Cytec Industries and Hexcel, based on expected delays in delivering Boeing’s 787 commercial aircraft.

Boeing announced on 9 April a six-month delay in 787 deliveries, which should have a modest effect on Cytec and Hexcel, according to a research note by Suisse analyst John McNulty. As a result, the firm reduced its 2009 estimates for the companies.

Credit Suisse cut its 2009 earnings per share (EPS) estimate on Cytec by 14 cents (€0.09), to $4.86, and on Hexcel by 10 cents to $1.14.

McNulty estimates that Cytec sells $1m of material for every 787 aircraft. Cytec would take a hit of 2-4 cents to EPS for every 10 delayed planes.

Hexcel sells about $1m-$1.3m of material into each 787 and would take a hit of 1-2 cents to EPS for every 10 delayed deliveries, he said.

Shares of Cytec fell 47 cents, or 0.8%, to $55.57 in morning trading on Tuesday on the New York Stock Exchange (NYSE). Shares of Hexcel were up 56 cents, or 3%, to $19.01.

Despite the estimate cuts, the analyst reiterated his outperform ratings for both Cytec and Hexcel, based on a favourable long-term outlook.

“While both Boeing and Airbus have faced challenges in ramping up their latest composite-intensive platforms, we believe that the secular trend towards increasing composite penetration on future aircraft will continue, driven primarily by the growing demand for the greater fuel efficiency and weight savings provided by these lighter planes,” McNulty said.

($1 = €0.63)

By: Joseph Chang
+1 713 525 2653

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