Deutsche Bank downgraded General Dynamics (GD ) to hold from buy.
Analyst Christopher Mecray says the weapons manufacturer's earnings per share report was well below estimates, driven by poor margins at the Gulfstream unit. Mecray sees the results as indicative of a far poorer situation in its Aerospace segment than the company has noted to date.
However, defense segments performed well in the fourth quarter, and the company's cash flow is solid. This tends to show that the company's overall financial stability remains strong despite reduced Aerospace profit rates.
Mecray notes the Gulfstream unit remains solidly in the black, and is performing better than its key competitors. His downgrade reflects an expected reduction in overall profit projection, and he is placing his price target under review.