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BB&T Capital Markets defense analyst Jeremy Devaney on the outlook for the defense sector.
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I love this Bill Clinton automatic spending cuts loom over the defense sector but our next guest says one pentagon supplier is a definite -- Jeremy Delaney EB and C capital markets senior defense analysts with us now.
You know we love -- this Jeremy but.
Starting to and it 2013.
If sequestration.
Happens automatic cuts in defense 500 billion -- you say every company with Department of Defense exposure -- Sure it when we when we look at the defense space right now it's certainly a tough time to be an investor in the space and since December we've advised clients that they need to be very tactical in their decisions and look look to invest in high priority areas of the defense budget rather than looking at.
Broad exposure the defense budget because we think being tactical about it is gonna allow them to gain some some more upside in avoid some of the brought broader downturn.
Because you seem -- -- are pretty confident that congress is not gonna get it together -- -- is -- kick in right.
And circus certainly -- when we look at the political landscape right now there hasn't been a dramatic change since we're on this program about four months ago and we think that there needs to be.
888 wholesale move to Simpson -- in order for our thesis come off the table.
OK and so that being said.
What's who wish we put our money.
Right now we're looking at a couple of priorities within the Department of Defense.
I unmanned systems and I SR the company that we we prefer here's Aerovironment -- AV AV we have a buy rating -- 33 dollar price target.
Aerovironment manufacture small unmanned aerial vehicles allows soldiers to do more with less -- allows -- -- Have awareness of their surroundings and as we draw down in Afghanistan.
Troops are gonna need to be doing more with fewer troops in the field -- they're gonna need to do things like self protect where they're taking care of themselves in not to have all the assets available to them that they once had so.
Aerovironment is one of the few companies and our space that's continue to see.
Organic growth in grow their bottom line without share buys.
I spoke quickly -- been hit its down 17% for the year -- -- turnaround.
There there was a lot of concern going into this past quarter I there there is a couple of orders that were tracking very closely day that it slipped.
On now now looking ahead we think that they're back on track organic growth a strong and quarter backlog grew in the quarter so moving forward we think -- -- can thread the needle.
Through sequestration because it is a high area of priority for the Department of Defense.
-- skits and -- demanding couldn't pick on a Friday afternoon with an up market thank you -- --
