Valuation Reflects Premium Attributes Of COL

Analyst Itay Michaeli of Citi Investment Research and Analysis initiates coverage of Rockwell Collins Inc (NYSE: COL) with a "hold" rating. The target price for COL is set to $57.

COL possesses a niche high-margin avionics/communications portfolio. Rockwell Collins leverages all its revenue streams with its integrated operating model. The history of the company’s operating margins has been healthy, the analyst says. Citi Investment Research and Analysis expects the company’s EPS for the years 2010-12 to be higher than the current consensus expectations.

The current valuation of Rockwell Collins’ stock reflects the premium attributes the company has. COL has limited tailwinds to boost its revenues significantly, the analyst says. The likely flattening of defense budgets would not contribute to the company’s revenues significantly, according to Citi Investment Research and Analysis.