Sector movers: Aerospace/defence lifted by Rolls-Royce, US durable goods

25th Jul 2013 14:56

Aerospace and defence stocks were the best performers in London on Thursday on the back of strong interim results from engine maker Rolls-Royce and US durable goods figures for last month which showed a big hike in orders from the sector.Rolls-Royce recorded revenues of £7.3bn, up 27% year-on-year and 1.0-2.0% ahead of estimates, while adjusted earnings per share of 33.33p (also up 27%) beat forecasts by 8.0%. Investec maintained its 'buy' rating for the stock today, saying that the shares deserve their premium rating to the sector."RR has been one of the best performers in the sector year to date (+36%) and on an FY14E price-to-earnings of 16.1x, is the highest rated global aerospace and defence company on this measure," said analyst Andrew Gollan."We continue to believe that a premium rating is fully justified by long-term growth and cash improvement as momentum in the Civil Aerospace segment increases."Rolls-Royce was trading 4.66% higher at 1,235p by 15:52.Sector peers BAE Systems, Ultra Electronics, QinetiQ, Chemring and Senior were also making gains this afternoon.Meanwhile, sentiment across the industry was also likely given a boost yesterday after results from US aircraft maker Boeing came in above expectations.Additionally, the closely-watched US durable goods data out on Thursday afternoon showed a much-better-than-expected 4.2% month-on-month jump in headline orders in June, mainly due to a 31.4% surge in commercial aircraft orders and a 29.6% increase in defence orders."The former was largely as we had expected given the jump in bookings already reported by Boeing. A lot of the latter was due to a sharp jump in military aircraft orders, which looks a little odd in light of the sequester," said Paul Ashworth, Chief US Economist from Capital Economics.Top performing sectors so far todayAerospace and Defence 5,289.15 +2.14%Pharmaceuticals & Biotechnology 11,391.04 +0.49%Insurance (non-life) 1,811.09 +0.32%Electronic & Electrical Equipment 3,878.39 +0.30%Industrial Transportation 2,961.92 +0.20%Bottom performing sectors so far todayAutomobiles & Parts 7,608.07 -4.60%Industrial Metals & Mining 1,265.91 -4.07%Technology Hardware & Equipment 1,014.98 -3.90%Fixed Line Telecommunications 3,812.64 -2.35%Beverages 14,527.66 -2.24%BC