Why Did Analysts Revise Their Ratings for UTX in 2Q16?


Jul. 12 2016, Updated 11:04 p.m. ET

Analyst recommendations

The consensus rating for United Technologies (UTX) among the 20 analysts listed on Bloomberg has changed slightly since the beginning of the second quarter on April 1, 2016.

The analysts from Goldman Sachs (GS) and RBC Capital Markets (RY) changed their ratings on UTX from “buy” to “hold” by the end of the quarter on June 30. On June 30, ten analysts each had a “buy” and “hold” rating on the stock.

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Notable analyst targets

However, the average 12-month target price increased in the quarter from $106.60 to $111.00 after several major investment banks (IYF) upgraded their targets. Barclays (BCS), which has an “equalweight” rating on the stock, revised its target from $100 in the beginning of April to $108 on June 27.

Similarly J.P. Morgan (JPM) increased its target from $100 in the beginning of April to $110. Morgan Stanley (MS) increased its target from $107 to $113 by the end of the quarter on June 30.

Stock performance

United Technologies’s stock returns from January 1–June 30, 2016, have been better than the Market. UTX stock returned 7.3% for the half year compared to the S&P 500’s returns of 4.3%.

Among UTX’s competitors in aerospace and industrials (RGI), Honeywell (HON) fared the best with returns of 13.4% for the six-month period between January–June 2016.

General Electric (GE) returned a paltry 2.5%, whereas Rockwell Collins’s (COL) stock fell by 6% in 1H16. Based on prices on June 30, UTX had a price-to-current-year earnings multiple of 15.7x. Similar multiples for GE, HON, and COL were 20.9x, 17.5x, and 15.5x, respectively.


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