United Technologies (UTX) Stock Slumps as RBC Cuts to 'Sector Perform'
NEW YORK (TheStreet) -- United Technologies stock is declining by 1.55% to $102.75 in pre-market trading on Tuesday, following a ratings downgrade to "sector perform" from "outperform" at RBC Capital earlier today.
The firm cut its price target by $1 to $108.
RBC Capital upgraded United Technologies a couple of months ago on the premise that Honeywell (HON) would remain a "stalking horse" after United Technologies thwarted its takeover bid, the firm wrote in a note.
But Honeywell has since named Darius Adamczyk as president and COO, and he will likely succeed CEO Dave Cote. The company also has announced a $5 billion buyback, suggesting Honeywell has moved on from pursuing the takeover, RBC pointed out.
"At the same time, we have seen nothing from UTX that suggests it is kicking into a higher gear on its capital deployment plans," the firm wrote, adding that the company's dividend has been raised by just 3% and United Technologies's buyback does nothing to improve its organic growth outlook.
RBC capital is concerned about this organic outlook, as problems with the company's Geared Turbofan have effectively stopped the Airbus (EADSY) A320 NEO line and are testing Airbus's patience.
Separately, TheStreet Ratings team rates the stock as a "buy" with a ratings score of B.
United Technologies' strengths such as its solid financial position based on a variety of debt and liquidity measures that we have evaluated outweigh the fact that the company has had lackluster performance in the stock itself.
You can view the full analysis from the report here: UTX
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.
