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5% to 10% Impact Seen on Defense Sector Stocks in a Sequestration Scenario: Wedbush Securities Expert Picks the Survivors

67 WALL STREET, New York - November 13, 2012 - The Wall Street Transcript has just published its Industrial Equipment, Aerospace and Defense Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Commercial Aviation and Energy Expenditures - Industrial Restructuring - Emerging Markets Penetration - Heightened M&A Activity - Future Growth and Market Share Gains - Increased Commercial Aircraft Production Rate - Defense Budget Uncertainty - Growth Opportunities in Data Security -

Companies include: Boeing Co. (BA), Precision Castparts Corp. (PCP), Rockwell Collins Inc. (COL), TransDigm Group Incorporated (TDG), Triumph Group Inc. (TGI), Spirit AeroSystems Holdings In (SPR), Hexcel Corp. (HXL), Esterline Technologies Corp. (ESL), LMI Aerospace Inc. (LMIA), Curtiss-Wright Corp. (CW), Lockheed Martin Corporation (LMT), Northrop Grumman Corporation (NOC), Raytheon Co. (RTN), General Dynamics Corp. (GD), BE Aerospace Inc. (BEAV) and many others.

In the following excerpt from the Industrial Equipment, Aerospace and Defense Report, an expert analyst from Wedbush Securities discusses the outlook for the sector for investors:

TWST: Please give us a quick idea of what you are covering in this space. It's a rather large and disjointed area.

Mr. Herbert: I tend to focus on companies with more commercial aerospace exposure, but most of the companies that I cover do have defense and business jet and broader exposure. A few of the companies I cover include Boeing (BA), Precision Castparts (PCP), Rockwell Collins (COL), TransDigm (TDG), Triumph Group (TGI), Spirit AeroSystems (SPR), Hexcel (HXL), Esterline (ESL), LMIA (LMIA), Curtiss-Wright (CW) and a few others.

TWST: So it's kind of a broad spectrum then.

Mr. Herbert: Exactly.

TWST: Please start from the top down. We keep hearing about the upcoming sequestration and the effects it's going to have. What does this mean if it happens in January as it's scheduled?

Mr. Herbert: That means a fairly significant impact. I think a lot of companies would generally agree that they are looking at probably a 5% to 10% reduction relative to current expectations for their military business, if you do. In fact, have a situation where sequestration takes place. So certainly it would be a near-term as well as a long-term impact.

Keep in mind, however, we are operating under a six-month continuing resolution now, which is limiting spending options. More importantly, however, the risk of sequestration has taken on a larger impact due to complete uncertainty that it has injected into the markets and investors' outlooks.

TWST: In general, what are the companies focusing on?

Mr. Herbert: I would say the companies are focused in a few areas. First, sequestration is currently the law of the land, so companies are working to ensure investors that they are planning accordingly. Having said this, I would argue that companies are limited in what they can plan for due to the uncertainty as to exactly how it would be implemented.

Moreover, it must be mentioned that even the Department of Defense, DoD, has been vague in their guidance on how companies and markets should be thinking about the risk of sequestration, partly operating under the assumption that it would be such a negative scenario, there is no way that it could actually happen.

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.