Posted on 02/03/2003 10:05:01 AM PST by ffusco
Reuters Shares of Space Shuttle Contractors Fall Monday February 3, 10:43 am ET
CHICAGO (Reuters) - Shares of space shuttle contractors Boeing Co. (NYSE:BA - News), Lockheed Martin Corp. (NYSE:LMT - News) and Alliant Techsystems Inc. (NYSE:ATK - News) fell on Monday, the first trading day after the Columbia shuttle disaster.
ADVERTISEMENTAlliant, which builds the solid rocket boosters for the shuttle, tumbled nearly 12 percent, its biggest one-day point loss since its October 1990 debut on the New York Stock Exchange and its biggest percentage loss since January 1993.
Credit Suisse First Boston downgraded Alliant stock to "neutral" from "outperform." Shuttle work accounts for 15 percent to 18 percent of Alliant's sales, according to CSFB.
"As much as we would like to hope otherwise, we believe there will be some inevitable panic around Alliant stock (especially given the large ownership by aggressive growth and momentum-oriented funds)," CSFB analysts Pierre Chao and Adam Weiner wrote in a research note.
Boeing and Lockheed -- the world's two largest defense and space contractors -- fell 2.7 and 1.8 percent, respectively, in early trading. The two companies are the U.S. space agency's prime contractors for the shuttle through a joint venture called United Space Alliance, based in Houston.
The space shuttle Columbia broke up over Texas on Saturday, killing the seven astronauts on board. The National Aeronautics and Space Administration has put all shuttle flights on hold while it investigates the cause of the disaster.
"The near-term impact will be fairly minor to Boeing and Lockheed Martin, which jointly run the shuttle program for NASA, with limited income slippage if the fleet is grounded for a year," Deutsche Bank Securities analyst Chris Mecray wrote in a research note.
"The impact to suppliers varies, with Alliant Techsystems topping the list as a key shuttle supplier (solid rocket boosters), while other key suppliers would likely absorb delays fairly easily," Mecray said.
Boeing shares fell 84 cents to $30.75, Lockheed Martin shares lost 94 cents to $50.11, and Alliant shares slumped $6.30 to $48.06, all in early trade on the New York Stock Exchange.
The loss of Columbia also hurt a number of smaller companies with connections to the shuttle, such as Moog Inc. (NYSE:MOGa - News), which provides precision control systems to the shuttle program. Moog said on Monday the disaster could reduce its revenue by $2 million this year. The company said it had expected 2003 revenue of about $13 million from the shuttle program.
Several companies provide United Space Alliance with parts for the shuttle. United Space Alliance also provides operations services for the International Space Station.
Boeing's Integrated Defense Systems is NASA's prime contractor for the space station. The Boeing unit has been criticized for cost overruns.
Chicago-based Boeing acquired the space business of Rockwell International in 1996.
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