In a report published Thursday, Bank of America analyst Ronald J. Epstein reiterated a Buy rating on Precision Castparts (NYSE: PCP), and raised the price target from $280.00 to $300.00.
In the report, Bank of America noted, “We continue to forecast revenue to grow at 10% CAGR and EPS to grow at 14% CAGR (FY14A-FY19E). Our estimates factor in operating margin expansion to 31.2% by FY19E from 27.8% in FY14A and a 3% CAGR decline in diluted share count. As we do not incorporate earnings growth from future possible acquisitions, from FY15-FY18 we are modeling aggregate share repurchase of $6.5bn and modest interest income of 1.2% on cash accumulated in the balance sheet to account for possible uses of cash.
"However, we note the company has a long and successful history of deploying cash through acquisitions and we do not expect this to change. We remain comfortable with our EPS estimates in FY15 and the outyears, albeit they are likely conservative because they do not reflect the impact of future M&A.”
Precision Castparts closed on Wednesday at $253.64.
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