UPDATE: Oppenheimer Upgrades L-3 Communications Holdings to Outperform, Names $128 PT on Investment Opportunity

In a report published Monday, Oppenheimer analyst Yair Reiner upgraded the rating on

from Perform to Outperform, and named a $128.00 price target. In the report, Oppenheimer noted, “We believe LLL's shares have been punished excessively following the revelation of accounting misstatements pertaining primarily to a single contract. The misstatements, spanning several years and totaling $87M in EBIT (at last estimate), are not negligible and suggest internal controls at LLL are not entirely what they should be. But in the final reckoning, we believe L-3's FCF performance—topping 135% of NI each of the last five years—is the most reliable gauge of the integrity of the company's overall results. That combined with LLL's valuation (~10% FCF yield) and the likelihood of a pending inflection in defense spending prompt us to view the stock's recent drubbing as an opportunity. Upgrade to Outperform with $128 PT.” L-3 Communications Holdings closed on Friday at $112.06.