Benzinga | Nov 11, 2021 01:10PM EST

BofA Downgrades This Shipbuilding Company - Read Why

* BofA analyst Ronald Epstein downgraded Huntington Ingalls Industries Inc (NYSE:HII) to Neutral from Buy and lowered the price target to $215 (suggesting an upside of 13%), from $240.

* The analyst notes that much of the 1% topline growth in the company's Q3 results was inorganic revenue coming from the recent Alion acquisition, with Huntington Ingalls recognizing lower volumes across its shipbuilding operations.

* Epstein says the support of Alion revenue also hid the headwinds in the company's Technical Solutions unit as it experienced delayed contract awards, though the segment's EBITDA margins will likely continue to improve.

* Recently, Barclays lowered its price target on Huntington to $212 (implying an upside of 11.52%) from $230 and maintained an Equal-weight rating on the shares.

* Also read: Huntington Ingalls Stock Slips Post Q3 Results, Misses Revenue Estimates.

* Price Action: HII shares are trading lower by 2.06% at $189.83 on the last check Thursday.