According to Laureate BVI, Gulfstream private jet subsidiary of General Dynamics (GD) is lifting revenue for the aerospace division and will continue this trend over the next 10 years.
Beverly Hills, CA -- (SBWIRE) -- 05/07/2014 -- Laureate BVI has assumed coverage on General Dynamics (GD) as the company reports lower sales in Combat Systems and Information Systems and Technology divisions.
Laureate reports, shares of General Dynamics (GD) are currently trading at US$111.49. GD has a 1-year low of US$74.74 and a 1-year high of US$113.57. The stock’s 50-day moving average is US$108.20 and its 200-day moving average is US$98.99.
Laureate BVI CEO Peter Tasca states, “General Dynamics is being lifted by its aerospace division Gulfstream which had orders soar 25%, lifting revenue to US$2.12 billion from US$1.78 billion a year ago. “
General Dynamics reported US$1.71 EPS for the quarter, beating the Thompson Reuters consensus estimate of US$1.64 by US$0.07. The company had revenue of US$7.40 billion for the quarter versus consensus estimate of US$7.20 billion.
Tasca states, “It’s important to note the funded backlog for General Dynamics at the end of first-quarter 2014 was US$48.3 billion, and total backlog was US$56 billion , a 20 per cent increase over 2013”.
There are currently 18 analysts with coverage on General Dynamics with a median target price of US$121.50.
Tasca further states, "we expect the catalyst for growth will come from China. China will become the largest economy in world this year but the number of corporate jets is fewer than 400, which is less than emerging countries such as Brasil and Mexico. The Orange County airport in California has more private jets than all of China.”
According to a report by Forbes, China has 152 Billionaires second only to the United States.
Laureate reports China has fewer than 400 airports for commercial use versus the United States that has over 18,000 air fields. The trend for private aviation is positive for China because the latest official plan promotes the development and reform of air space which is currently blocked by China’s Air Force.
Private jet manufacturer Bombardier, forecasts that from 2013 to 2032 Chinese customers will take delivery of more than 2,400 jets.
Consultant Jason Liao of China Business Aviation Group says, “the chief buyers are private companies, typically using financing or leasing schemes, and utilization rates are soaring as the jets are put to business use. This is a market that looks, at long last, set to take-off”.
Tasca adds, “Warren Buffet’s Netjets which is a fractional ownership scheme for private jets is also setting up shop in China. A company like this would not enter a market where they do not see a trend developing. In this market it is difficult to find growth but we see substantial opportunity in private aviation with a country like China.”
Laureate Trust has a Strong Buy on General Dynamics (GD) with a target price of US$130.
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