|Bid||61.01 x 1000|
|Ask||61.02 x 2200|
|Day's Range||58.80 - 61.19|
|52 Week Range||38.00 - 66.00|
|Beta (5Y Monthly)||N/A|
|PE Ratio (TTM)||N/A|
|Earnings Date||Oct 26, 2020|
|Forward Dividend & Yield||0.80 (1.29%)|
|Ex-Dividend Date||Nov 19, 2020|
|1y Target Est||68.75|
(Bloomberg Opinion) -- The future of work at Raytheon Technologies Corp. is going to mean fewer people in offices and more robots on the factory floor. The aerospace and defense giant on Tuesday reported third-quarter earnings and free cash flow that were better than analysts had expected, even as the recovery in the commercial side of its business continues at a snail’s pace. Raytheon reiterated its expectation that global air traffic won’t return to 2019 levels until at least 2023 — and that’s assuming the successful development and broad distribution of a coronavirus vaccine. “It's clearly not a V, all right? This is going to be a long, slow recovery,” Raytheon Chief Executive Officer Greg Hayes said on a call with analysts to discuss the results. “We continue to focus on what we can control.” That means building on expected cost savings from the merger between United Technologies Corp. and Raytheon Co. completed earlier this year. And then some. The company had previously planned to consolidate its office space in light of the combination and was targeting a 10% reduction in its 31 million square feet of real estate. But after touring facilities where only a handful of people are now on-site and the rest are diligently (and productively) working remotely, Hayes came to the conclusion that “we don’t need all this space.” Raytheon now plans to double its previous goal and ultimately get rid of as much as 25% of its office square footage, starting with locations it currently leases. Hayes probably isn’t the only executive to wonder if the pandemic-driven work-from-home revolution offers an opportunity for cost savings, but this shift feels more meaningful coming from a company that used to sell quite a lot of products to the commercial real estate market. In conjunction with the Raytheon merger, the former United Technologies also spun off its Otis Worldwide Corp. elevator unit and the Carrier Global Corp. heating and air conditioner division. Those businesses will suffer if more companies follow Raytheon’s lead and decide they, too, can function with significantly less office space.Raytheon is also planning to consolidate some of its manufacturing real estate in lower-cost locations and reimagining what those factories should look like on the inside. The company highlighted a new turbine airfoil facility for its Pratt & Whitney jet-engine division that will be based in Asheville, North Carolina, and will combine work that’s now spread across multiple sites and throughout the supply chain. North Carolina’s flat corporate income tax rate of 2.5% is the lowest in the country among states that apply a levy, compared with a top marginal rate of 8% in Raytheon’s home state of Massachusetts, according to the right-leaning Tax Foundation. This new facility in North Carolina will be “highly automated,” and Raytheon expects to achieve $175 million in annual cost savings. There’s been a lot of talk about a potential resurgence in U.S. manufacturing in the wake of the pandemic, whether that’s due to companies growing disillusioned with the benefits of far-flung supply chains and relocating facilities back home or the prospects of a major infrastructure spending push by the government. Raytheon’s commentary on Tuesday underscores why the jobs component of these initiatives is far from straightforward. As I’ve written, companies are going to be reluctant to give up the cost cuts they achieved in the pandemic, and it’s likely that many of the jobs eliminated during the peak of the disruption might never come back. A “reshoring” of manufacturing work from China to the U.S. — to the extent it actually happens — seems more likely to spark a golden age for automation.To that end, Raytheon said Tuesday that only about half of the 15,000 jobs being cut from its commercial aerospace businesses would return once demand eventually recovers. “We’ve got to keep the other 50% from coming back, and that's what's going to give us leverage on the upside when we do indeed see a return to normalcy in air traffic,” Hayes said. Much of the reduction will come from eliminating layers of management and overlap in centralized functions like procurement. “It should lead to, long term, a much more efficient organization,” he added. All in, Raytheon is eliminating roughly 20,000 jobs this year, including 4,000 contractor positions and 1,000 previously expected adjustments because of the merger. And this is coming from a company that had $10 billion of cash on its balance sheet at the end of the third quarter and sees the current crisis as an opportunity to invest in next-generation technology and gain more market share. “You have to invest for the long term,” Hayes said. Indeed, just not in people or office space, apparently. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brooke Sutherland is a Bloomberg Opinion columnist covering deals and industrial companies. She previously wrote an M&A column for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Otis Worldwide Corp. raised its 2020 profit outlook as 3Q adjusted earnings per share jumped 25.5% to $0.69 year-over-year, surpassing analysts’ expectations of $0.56. The elevator and escalator installation company's bottom-line results mainly benefited from cost-containment measures, improved productivity and favourable foreign currency exchange rates.Otis (OTIS) 3Q revenues declined 1.4% on a year-over-year basis to $3.27 billion but beat Street estimates of $3.21 billion. The company reported a slight improvement in new equipment orders and a 5% year-over-year growth in new equipment backlog.The company’s CEO Judy Marks said, "Otis had another strong quarter as we continued to grow share, build backlog, expand adjusted margin and generate robust cash flow. These outcomes again demonstrate the resiliency of our business, the strength of our strategy and the dedication of our colleagues around the world to provide essential services to our customers while introducing innovative solutions to grow our business." (See OTIS stock analysis on TipRanks).Buoyed by better-than-expected quarterly performance, Otis raised its full-year 2020 earnings outlook. The company now anticipates 2020 adjusted EPS of approximately $2.42, up from the previous forecast of $2.20-$2.30. Revenue is expected to decline 3%-4% compared with the earlier projection for a drop of 4.5%-6.5%.Following its earnings release, Cowen & Co. analyst Cai Rumohr raised the stock's price target of $75 (18.7% upside potential) from $70 and reiterated a Buy rating, saying that “Q3's beat & raise supports Otis's management change and share gain growth story.” Rumohr also noted that the upbeat 2020 earnings outlook “reflects seasonal slowing (Golden Week in China), growth investments, and higher corporate costs.”Currently, the Street is cautiously optimistic on the stock. The Moderate Buy analyst consensus is based on 3 Buys, 2 Holds and 1 Sell. The average price target of $66.17 implies upside potential of about 4.7% to current levels. Shares are up nearly 41% since the stock started trading on NYSE on March 19.Related News: Barnes’ 3Q Profit Drops 66%, Sees Lower 4Q Sales Seagate’s 1Q Sales Miss; Analyst Raises PT SAP Slashes 2020 Guidance As Covid-19 Surge Slows Recovery More recent articles from Smarter Analyst: * Facebook Kicks Off Cloud Gaming Launch With Free-To-Play Games * Eli Lilly Ends Covid-19 Trial In Hospitalized Patients On Disappointing Data * Varonis Beats 3Q Profit Estimates; Shares Spike 9% * Lockheed Martin Scores Over $740M In Navy Contract Modifications
FARMINGTON, Conn., Oct. 26, 2020 /PRNewswire/ -- Otis Worldwide Corporation (NYSE:OTIS) reported third quarter 2020 net sales of $3.3 billion, a decrease of 1.2% organically versus the prior year. GAAP diluted earnings per share (EPS) decreased 16.4% to $0.61 and adjusted diluted EPS increased 25.5% to $0.69.