FW: UBS Business Jet Survey: Index Reflects Fear of Slowdown, Market Looks Stable
From: Sean J. Lancaster
[mailto:slancaster@bristolassociates.com]
Sent: Wednesday, March 05, 2008 8:23 AM
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Subject: FW: UBS Business Jet Survey: Index Reflects Fear of Slowdown,
Market Looks Stable
This
months reports, trending towards a slowdown
Best regards
Sean J. Lancaster
Bristol Associates Inc.
1-540-665-5135 direct
1-202-682-4000 ext 1130 Main Office
1-540-533-8183 Mobile
1-540-301-0050 FAX
slancaster@bristolassociates.com
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From:
David.Strauss@ubs.com [mailto:David.Strauss@ubs.com]
Sent: Wednesday, March 05, 2008 8:14 AM
To: David.Strauss@ubs.com
Subject: UBS Business Jet Survey: Index Reflects Fear of Slowdown,
Market Looks Stable
- February index score at 48: Our business
jet index came in at 48, 11% below our January survey and the first time
it has fallen below 50 since June 2003, implying slight weakening in
bizjet market conditions along with fear that market will fall further.
However, we believe still strong business conditions and positive used
indicators reflect a relatively stable market bumping up against tough
comparisons.
- Respondents pessimistic on outlook, but see no
slowing yet: Our survey results were primarily driven by our lower
outlook score as nearly 50% of respondents stated they expect business
conditions to deteriorate over the next 12 months. We think this reflects
fear of the unknown as opposed to anything tangible as respondents at the
same time continue to cite a strong market, with current business
conditions just off their all time high.
- Used market indicators remains positive:
The used market indicators that we track generally remain positive as used
inventories remain low and pricing increased slightly from Dec and is up
12% y/y.
- Buy recommendations on GD/TXT: We believe
strong demand in 2006-07 and the ramp up in new light jets will drive
deliveries and earnings higher through 2010. Trading at 13-14x forward EPS
we think GD/TXT already appropriately reflect likelihood for orders to
slow to more normal levels in 2008.
Please see our full note attached.
David
<<Bizjet_Survey_030508.pdf>>
David Strauss
UBS Investment Research
U.S. Aerospace & Defense
(212) 713-6185
david.strauss@ubs.com
UBS Traders:
Tor Sippel (203) 719-7400; torsten.sippel@ubs.com
Brian Dineen (203) 719-7400; brian.dineen@ubs.com