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2015 All-America Research Team: Aerospace & Defense Electronics, No. 2: Douglas Harned

For a third consecutive year — and the fifth time since 2009 — Sanford C. Bernstein & Co.’s Douglas Harned captures second-place honors.

Douglas Harned
Sanford C. Bernstein & Co.
First-place appearances: 1

Total appearances: 10

Analyst debut: 2006

For a third consecutive year — and the fifth time since 2009 — Sanford C. Bernstein & Co.’s Douglas Harned captures second-place honors. “Doug’s valuation-oriented stock-selection approach fits our style,” attests one fund manager. That type of analysis led the researcher to make a couple of moves over the past year on Falls Church, Virginia–based Northrop Grumman Corp., a manufacturer of surveillance and combat aircraft. He boosted his rating on the company from market perform to outperform in December, at $137.89, largely crediting its high free-cash-flow yields. Then in February, with the stock up 19.5 percent and ahead of its peers by 14.4 percentage points, he shifted back to market weight, foreseeing a challenging earnings environment for the year ahead and believing that the benefits of Northrop Grumman’s business mix alignment with U.S. Department of Defense priorities were already priced in. The shares closed at $168.98 in mid-September, up 2.3 percent against the 7.4 percent loss posted by U.S. aerospace and defense names overall. Harned, 61, follows 14 companies, and he continues to be optimistic about the prospects for Chicago’s Boeing Co., since raising his rating from market perform to outperform in June 2012, primarily on valuation. The biggest aircraft maker in the world, Boeing enjoys strong free cash flow and high demand from China, he notes. By the middle of last month, the stock had soared 109.5 percent, to $136.09, outdistancing the sector by 32.1 percentage points. Over the trailing 12-month period, it climbed 8.5 percent, compared with its peers’ rise of 1.5 percent. He believes that a price of $190 is justified for Boeing.


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