General Dynamics Corp. share price down, Gulfstream Aerospace set to announce new business jet

Gulfstream Aerospace Corp, a subsidiary of General Dynamics Corp, is expected to unveil a new business jet, as it has called media and analysts to its announcement on Tuesday. The invitations were non-descriptive but several people familiar with the matter had confirmed that it will involve a new plane.

Gulfstream has a history of keeping secrets around details of its new models. Flagship G650 and the smaller G280 were announced long after the company started working on them. This approach has helped Gulfstream to become the global market leader by sales.

Being able to keep a secret about a new model is considered a challenge, especially in the civil aerospace business. Gulfstream has managed to do just that by working with a very tight circle of suppliers and keeping the information available at a minimum. Nevertheless, analysts believe that much of the technology used to build the new plane was first used in the G650, which was unveiled in 2012 and still holds the record for longest travel range of all business jets, being able to fly 7 000 nautical miles and carry up to 18 passengers.

People with insight on the matter said that the P42, as they refer to it, is expected to eventually replace Gulfstreams current best selling models, the G550 and the smaller G450. The P42 will have a new engine supplied by Pratt & Whitney Canada, taking the place of an existing partner – Rolls-Royce Holdings PLC.

According to Howard Rubel, an analyst at Jefferies & Co., satellite photos of the companys Savannah factory indicated new planes were being tested. Furthermore, the unit in Georgia has expanded by around 2 million square feet, most likely to prepare for the unveiling of the P42.

The new model is expected to compete in the so-called super large-cabin jet market. Some of the extras may include convertible sleeping berths, kitchens, on-board showers, satellite Wi-Fi Internet and the ability to fly non-stop for up to 15 hours.

Analyst predict that the P42 will fly around 5 000 nautical miles and deliveries will begin in 2015. But that may not be the case, due to the fact that Gulfstream began to ship its previous two models nearly three years after their first flight.

General Dynamics has been the best performing aerospace and defense stock this year, up 26.87% to date versus a 6% gain for defense stocks and a 5% decline for commercial aerospace companies.

General Dynamics Corp. fell by 0.23% on Friday and closed at $121.22 in New York, marking a one-year change of +36.38% The company is valued at $40.53 billion. According to the Financial Times, the 18 analysts offering 12 month price targets for General Dynamics Corp. have a median target of $136.50, with a high estimate of $156.00 and a low estimate of $122.00. The median estimate represents a 12.61% increase from the last price of $121.22