Capital Goods/Industrials – Aerospace & Defense Electronics: Second

Ronald EpsteinBank of America
Merrill Lynch

Repeat second-teamer Ronald Epstein of Bank of America Merrill Lynch, who reports on 25 companies, “understands the science and engineering — as well as the top-down considerations — well before his peers,” insists one money manager. Epstein initiated coverage of Precision Castparts Corp. in January 2009 with a valuation-based buy rating, at $58.13. In January 2012, citing slowing sales at the Portland, Oregon–based component manufacturer, he changed his stance to neutral. By then the stock had bolted to $177.24 — a spectacular 204.9 percent advance that shot past the sector by 150 percentage points. The shares subsequently slid 9.1 percent, to $161.08, through August. Epstein currently prefers commercial aerospace original-equipment manufacturers such as Seattle’s Boeing Co. over aftermarket suppliers and defense contractors, anticipating swelling demand and margin improvements.

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