January 25, 2010 / 3:20 PM / 8 years ago

UPDATE 1-RESEARCH ALERT-UBS raises General Dynamics to buy

Jan 25 (Reuters) - UBS upgraded defense contractor General Dynamics Corp (GD.N) by a notch to “buy,” citing an improved business jet market, along with ongoing demand for its military products.

The brokerage said it had expected the fourth-largest U.S. defense company to be hit hard by defense budget pressure and program cuts, specifically its Virginia Class submarine, Stryker, and Extraordinary Fighting Vehicle (EFV) programs.

“It now appears VA Class is secure at two per year, Stryker will be well funded to add one to two additional Stryker Brigade Combat Teams and EFV will only be cut modestly, not cancelled,” analyst David Strauss wrote in a note to clients.

Separately, Strauss also said a stable business jet market, with a particular focus on large cabin demand and pricing, bode well for the company.

“While we expect the recovery from here to be relatively slow, we expect the large cabin market and Gulfstream to disproportionately benefit given strong international demand combined with limited available aircraft,” the analyst noted.

With 2009 turning out to be rather hard on the general aviation aircraft market, the business jet market is expected to rebound in 2011.

Shares of the Falls Church, Virginia-based company were trading up more than a percent at $68.12 in morning trade on the New York Stock Exchange. (Reporting by Biswarup Gooptu in Bangalore; Editing by Anil D’Silva)

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