Back to top

Analyst Blog

On Oct 10, 2013, we downgraded our recommendation on aerospace and defense company, Alliant Techsystems Inc. (ATK - Analyst Report), to Neutral from Outperform. The company currently has a Zacks Rank #3 (Hold).

Why the Downgrade?

We have downgraded our recommendation on the stock primarily due to the negative impact from the current U.S. government shutdown, the U.S. defense budget cutbacks, gradual withdrawal of troops from Afghanistan and risks related to different program execution.

These negative factors have also been reflected on the Zacks Consensus Estimates. In the last 7 days, estimates for the company’s fiscal year 2014 earnings decreased by a penny to $8.83. In addition, the company’s expected sales growth is -0.68%.

Cause for Concern

Alliant Techsystems provides various kinds of products and services to different U.S. defense establishments and the inflows of contracts are a major source of its revenue. Due to the current U.S. shutdown, the company’s near-term performance might be affected.

The company generates a major chunk of its revenues from the U.S. Department of Defense contracts. The ongoing cutback on the U.S. defense budget is also a major cause of concern, which will significantly impact Alliant Techsystems’ upcoming order books.

Alliant Techsystems has a strong presence in the small caliber ammunition market. However, the ongoing withdrawal of troops from Afghanistan could lead to a decrease in demand for small caliber ammunitions. Moreover, lower ammunition demand may discourage the U.S. Department of Defense from placing new orders and renewing the existing contracts with the company.

Other Stocks to Consider     

Other stocks from the defense industry that are presently performing well include Elbit Systems Ltd. with a Zacks Rank #1 (Strong Buy), and Esterline Technologies Corp. (ESL - Snapshot Report) and HEICO Corporation (HEI - Snapshot Report), each with a Zacks Rank #2 (Buy).

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
UTD THERAPE… UTHR 117.83 +28.51%
TRIQUINT SE… TQNT 20.67 +6.52%
RF MICRO DE… RFMD 12.47 +6.04%
VASCO DATA… VDSI 14.77 +4.68%
BANCO DO BR… BDORY 15.53 +3.95%