Analyst downgrades Lockheed's stock rating

posted: 44 DAYS 3 HOURS AGO

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WASHINGTON -An analyst on Monday downgraded defense contractor Lockheed Martin Corp.'s stock rating citing eroding aerospace prospects and limited earnings growth in 2010 due to pension contributions.

Cowen & Co. analyst Cai von Rumohr lowered the Bethesda, Md.-based company's stock rating to "Neutral" from "Outperform" due in part to a possible extension of F-16 jet orders to Egypt and Taiwan and the cancellation of the F-22 fighter jet. The result, he said, would "augur lower sales on these high margin programs next year."

Even with higher sales of a lower margin mix of more domestic C-130Js next year, aerospace profits look "flattish in 2010 with higher growth possible in 2011," added Rumohr.

He reduced his 2010 earnings estimate by 30 cents to $7.70 per share to reflect the aerospace slip and lift in pension expenses. That's below Wall Street's consensus view of $7.99, according to a survey by Thomson Reuters.

The analyst also said a likely ramp up in pension contributions and higher working capital could restrict cash flow to $2.75 billion in 2011.

Lockheed Martin reports its third quarter results on Oct. 20.

Shares of the company fell $1.48 to $74.33 in afternoon trading.

2009-10-12 14:56:31