United Technologies ‘Breakup Anxiety Overdone,’ RBC Analyst Says

(Bloomberg) -- United Technologies Corp. shares are struggling again Wednesday, down for a second session since the industrial conglomerate unveiled its plan to split into three companies.

News of the planned breakup was far from a surprise, and had been expected to drop right after United Technologies secured final approval for its mammoth deal to buy Rockwell Collins Inc. That final nod from China was announced Nov. 23.

The main fuel behind investors’ anxiety appears to be concerns about Rockwell Collins’s worse-than-expected free cash flow expectations, analysts said, along with the extended 2020 target for completing the separation, as well as reflexive “sell-the-news” trading.

The Collins cash flow “commotion looks overdone,” RBC Capital Markets analyst Deane Dray wrote in a note to clients, adding that the “shortfall is mostly from deal-related issues and not indicative of a major cash generation problem.”

United Technologies shares fell 1.1 percent to $121.36 as of 12:36 p.m. in New York, paring an earlier 2.1 percent decline. The stock closed 4.1 percent lower on Tuesday.

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