For Immediate Release

Chicago, IL – November 4, 2009 – releases the latest Industry Outlook. Today, Zacks Equity Research discusses the Aerospace & Defense sector, including United Technologies Corporation (UTX), Oshkosh Corporation (OSK), The Boeing Company (BA) and Honeywell International Inc. (HON).

A synopsis of today’s Industry Outlook is presented below. The full article can be read at

With core defense spending expected to slow, U.S. defense contractors need to identify additional revenue sources for the coming years. 2009 holds potential for interesting merger and acquisition (M&A) activity, mostly smaller deals by larger A&D firms to fill in capability gaps — particularly in the security, defense electronics and aftermarket services business areas. U.S. defense firms may see opportunities in credit-squeezed markets to pick up U.S. assets at historically low price-to-earnings multiples.

Some large companies are expanding into the adjacent markets of mission support and services, such as performance-based logistics, or PBL, which can provide a more consistent — albeit riskier though perhaps more profitable — revenue stream.

Building on the example set by engine manufacturers — Pratt & Whitney, a United Technologies Corporation (UTX) company, and Rolls-Royce Group — to get 50% of revenues and 60% of profits from their services business, Aerospace & Defense contractors are learning how to take on, measure and internalize risk and to make support and services offerings profitable. This includes understanding how to service the equipment they manufacture, and assembling the necessary infrastructure, capabilities and people to operate it.

Shifting defense priorities could prove to be a boon for some manufacturers as the Pentagon looks to beef up protection for US ground soldiers. Oshkosh Corporation (OSK) is aiming to induct 300 to 500 workers in Wisconsin and calling back as many as 650 it had let go at a Pennsylvania facility as it looks to fill orders for armored trucks that can deflect roadside bombs. The truck manufacturer also won a $1.1 billion contract to build more than 2,200 Mine Resistant Ambush Protect All Terrain Vehicles for use by US troops in Afghanistan.

Companies are also leveraging strong balance sheets to grow organically and acquire new services business. As product development transitions to production program deliveries, it is anticipated that companies will ramp up their services businesses and profitability should improve.

Overall, in the next two decades, The Boeing Company (BA) forecasts delivery of 29,400 new commercial aircraft worth $3.2 trillion. Honeywell International Inc.’s (HON) 2008 forecast predicts 17,000 new business aircraft valued at $300 billion.

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