NEW YORK (AP) - Shares of industrial conglomerate Textron Inc. rose Thursday after JPMorgan issued a bullish report, saying a recent selloff in the stock on fears of a slump in the business-jet sector was overdone.
After hitting an all-time high of $98.96 on May 11, Textron shares fell 17 percent in the next four weeks to $82.51. The stock has since recouped some of the losses, and on Thursday added another $2, or 2.3 percent, to $90.26 in recent trading on the New York Stock Exchange.
JPMorgan analyst Stephen Tusa said investors have been concerned that Textron, whose businesses include Cessna jets, Bell helicopters, E-Z-GO golf carts, military vehicles and industrial products, may be exposed to a potential cyclical downturn in the sectors in which it operates.
That is what happened starting in 1999, when Textron shares fell nearly 70 percent from a peak near $95 in May of that year to around $30 in late 2001. Much of the decline came after the business-jet market collapsed, sending Cessna into a tailspin.
But Tusa does not expect a repeat. ''Textron is fundamentally better off today than it was during the late stages of the previous cycle,'' he wrote.
The primary change is at Cessna, Tusa said, which is more diversified with higher quality products. He also thinks any downturn in the business-jet cycle will not occur before 2009, even though some investors are worried a slump in corporate profits is in the offing.
On Thursday, the Commerce Department reported the economy grew 5.6 percent in the first quarter, its fastest pace in 2 1/2 years - which will perhaps quell some of those fears.
Tusa also said the last cycle exposed other problems at Textron. ''These included first and foremost, unfavorable capital deployment, along with major issues at Bell and unsustainable earnings performance'' at the industrials unit, he said.
Since 2001, Textron has shed units with revenues of more than $4 billion as the company reduced operating costs and improved manufacturing.
''Through the significant heavy lifting of the last several years,'' Tusa wrote, ''and a turn in the key helicopter business at Bell, the risk profile at Textron has been significantly changed for the better.''
''We think the stock should outperform, even in the worst-case scenario of an early turn in the business-jet cycle,'' Tusa said. He issued a one-year share-price target of $110.