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United Technologies Guidance: Not As Bad As Expected, But Too Early To 'Pull The Trigger'

Barclays maintained its Equal-Weight rating on United Technologies Corporation UTX saying it's too early to get optimistic on shares despite slightly better-than-expected 2017 outlook.

United Tech sees 2017 EPS of $6.30 to $6.60, versus consensus view of $6.58, and sales $57.5 billion to $59 billion versus Street estimate of $59.2 billion. The brokerage said there were no surprises in the outlook barring a top-line growth expectation for Otis.

“While UTX's 2017 outlook call offered no real surpasses and the expression of confidence that revised plans are an track, our gut feeling is that it’s still a bit early to get overly optimistic about earnings growth acceleration,” analyst Carter Copeland wrote in a note.

Copeland prefers to remain on the sidelines as investment headwinds would weigh on near-to-medium term earnings growth and creates operational risk that can be “easy to overlook in our experience.”

“AJI in, the plan for flat EPS growth at the high end of the range looks achievable but not without some risks, more so in Asia/EMEA and at Pratt where aftermarket compares will be tough next year,” Copeland highlighted.

However, Copeland believes shares have the potential to re-rate significantly over time as the benefits from program investments begin to flow through to earnings and cash.

At last check, shares of United Technologies were down 0.56 percent to $108.66. Copeland has a price target of $111.

Dec 2016Credit SuisseUpgradesNeutralOutperform
Dec 2016Deutsche BankMaintainsHold
Oct 2016MaintainsNeutral

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