Ahead of the Bell: Barnes Group

Analyst sees continued weakness into 2010 for Barnes Group's aerospace business

• On 8:38 am EST, Monday November 2, 2009

HARTFORD, Conn. (AP) -- Barnes Group Inc.'s aerospace business will continue to feel the impact of the recession well into next year, an analyst said Monday, trimming his price target on the stock.

R.W. Baird analyst Peter Lisnic cut his price target to $15 from $16 and maintained his "Neutral" rating on the aerospace and industrial parts company.

Volume in industrial markets appears to be close to a bottom and the Barnes Group could benefit from improved demand, he said in a client note.

"However, a bottom in the higher-margin aerospace business could be pushed well into the second half 2010," he said.

Barnes, based in Bristol, Conn., said Friday it earned $10.9 million in the third quarter, or 20 cents per share, down 61 percent from $27.8 million, or 49 cents per share in the same period last year.

Analysts surveyed by Thomson Reuters expected earnings of 21 cents per share.

Revenue for the quarter ended Sept. 30 was $260.3 million, down 22 percent from $333.8 million in the year-ago period.

Analysts expected earnings of $254.4 million, according to a survey of Thomson One.

Gregory F. Milzcik, president and CEO, said the company has not yet seen the "sustained signs of a turnaround in the global economy."

The company's shares plunged nearly 9 percent Friday, closing at $15.85.

Lisnic said Barnes Group's industrial markets appear to be nearing a bottom, possibly benefiting from improved demand. But he said a bottom in higher-margin aerospace business "could be pushed well into" the second half of 2010.

He increased his 2009 earnings estimate to 79 cents per share from 75 cents, but cut his 2010 estimate to 95 cents per share from $1.05 on lower profitability assumptions.

Analysts expect per-share earnings to be 86 cents per share this year and $1.15 per share for 2010.

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