Goldman Conviction Buy And Cessna Maker Textron Announces $1.7 Billion Loss In Backlog
On September 2 Goldman upgraded Textron to Conviction Buy ($23 PT) and provided the following catalysts as key items to keep an eye on:
year ago, each of Textron’s businesses were going the wrong way:
Corporate profits and the Industrial economy were rolling over, which
had negative implications for Cessna and Industrial, Financials were
facing severe challenges which had negative implications for TFC, and a
leadership change was about to take place in Washington with negative
implications for Defense and therefore Bell and Systems. Today,
we see the exact opposite occurring.
Unfortunately for Goldman's pie in the sky/conviction buy thesis what we really are seeing today is the opposite of the opposite, which comes to us via the following press release from Textron:
The company has
been in discussions with a large customer concerning the cancellation of
about $1.1 billion of jets it had on order with Cessna.
Will we see some more conviction buying from Goldman on this news? Or has it been largely "priced in?" More from the PR:
The company expects that cancellations in the fourth quarter will reduce
backlog by a total of approximately $1.7 billion. These cancellations
are not expected to have a material impact on planned deliveries through
Three days ago Goldman portfolio company Hawker announced that its backlog plunged by 40% after NetJets announced it had cut 90% of its backlog. We wondered whether this action would end Textron's presence on the "Prop Trading Conviction Sell list, aka Outside Idiot Clients Conviction Buy list" - it did not. Yet if today's news somehow does not filter to Goldman private jet cheerleader Noah Poponak, we will be firmly convinced that Double Wide Chinese Walls (the kind that keeps any information out of the research department) at Goldman are truly unassailable by the retail/institutional investor hordes.