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After the release of United Technologies Corporations' (NYSE:UTX) Q4 fiscal 2013 results Deutsche Bank raised the company's target price from $120 to $123, recommending a buy ranking for the stock. Additionally, analysts at RBC Capital also lifted their target stock price estimates for United Technologies from $129 to $132, rating the stock as outperform. Analysts at Morgan Stanley also have a price target of $121 for the company's stock, while analysts at Citigroup have a $125 price target for the company's stock. The stock is currently trading at around 111.80.

Comparing the company's current stock price against the predictions of target prices made by popular analysts indicates that the stock is a good buying opportunity. So, I will analyze the company's recently reported results along with a full-year glimpse for fiscal 2013. I will also determine the company's future outlook based on external factors such as industry growth.

A Glance at Q4 and Full Year Results

The company reported an EPS of $1.58 for its Q4 fiscal 2013 which was up $0.06 from the consensus estimate despite restructuring charges of $0.11. This EPS was much higher compared to the previous fiscal year's Q4 of $1.04.

However, the company's revenue of $16.8 billion for Q4 was below the consensus estimate of $17.09 billion. Still ,the revenue was 1.9% higher than the revenues of Q4 2012. Analysts forecasted the company would post an EPS of $6.16 for the fiscal year that recently ended. The company has actually reported an EPS of $6.21 reflecting an increase from $5.35. As a whole, the company recorded revenues of $63 billion for fiscal year 2013, up from $57.71.

The company experienced a slow recovery in its end markets but its benefits from strategic moves and cost-saving measures resulted in a 16% earnings growth. Goodrich, a company acquired in the middle of 2012, successfully added synergies to the company during fiscal year 2013. Therefore, I will analyze the industries the company deals in to understand the growth prospects for the company from external factors. The company's upcoming strategic moves will also be viewed.

The company's organic sales grew by 4% during the last quarter of fiscal 2013 following flat growth during the previous three fiscal quarters. Commercial business logged a 7% growth as the U.S. economies recovered a bit. The Asian markets remained a bit weak, but the company was still able to exhibit a 4% growth in its business from the region on behalf of the high 9% growth in China. Europe remained flat. I will also consider these major revenue driving geographic regions for the company and analyze the global industries in which the company trades.

Defense was a weak area in terms of revenue generation. I will also forecast the U.S. Defense spending in the coming years to understand the recovery in this segment. A substantial 14% growth in commercial OE and aftermarket accelerated the company's top-line during the fourth quarter of fiscal year 2013. As a result, I will be looking at the future outlook of this industry as well.

Now let's have a brief look at the major contributors to the company's financial performance.

Segment Review: Internal Drivers of the Company's Growth

The company operates through its five business segments to provide high-tech products and services to aerospace industries and building systems around the globe. These five segments include: Otis, UTC Climate, Controls & Security, Pratt & Whitney, UTC Aerospace Systems, and Sikorsky.

Otis deals in elevators, escalators, moving walkways and the maintenance of this technology. UTC Climate, Controls and Security offers heating, ventilating, and air conditioning and refrigeration systems for domestic and industrial usage. The Pratt & Whitney segment deals in engines for aviation and power units. UTC Aerospace systems deals in designing, manufacturing products and provides maintenance services related to military and commercial aircraft. Goodrich, acquired during the previous fiscal year, has been added to this segment. Sikorsky manufactures hipsters for commercial and military market.

I have combined the quarterly financial results for the company to showcase the aggregate figures for fiscal year 2013. The figures for 2013 are just preliminary values.

Source: UTX 10K and Presentations

From the table above, you can see that the UTC Climate, Controls & Security segment is the major contributor to the company's sales revenue. The segment is related to the buildings and construction industry. The economic crisis hindered the growth of this industry over the several years and has also negatively impacted the revenue generated by the company through its UTS Climate, Controls & Security segment. The Otis segment also deals in supplying materials to buildings and has also recorded negative 3.1% growth in its revenue in 2012. Combined, these two segments regenerated more than 50% of the company's total revenue up until 2012, I will consider the outlook for the building and construction industry to assess recovery in this area in the coming years.

The aviation industry is also important as the rest of the company's segments deals in this industry. Till now the company has been reaping the benefits of its successful acquisition of Goodrich. The company has recorded a 60.2% increase in the UTC Aerospace systems segment's revenue for the current year as a result of this acquisition. The Sikorsky segment has turned into the weakest contributor to the company's revenue.

Now I will have a look at the trends of these industries to predict the recovery in the company's weak segments in the future.

Industry Outlook;-External Drivers for the Company's Growth

Global Aviation

This market remained mixed due to growth in the commercial segment that was offset by the decline in the military segment. The company's segments associated with aviation are Pratt & Whitney, UTC Aerospace Systems and Sikorsky. I am bifurcating the industry into the U.S. and global defense and global commercial aviation in order to analyze the industry more appropriately.

US and Global Defense

Source: Washington Post

The market for defense depends upon spending from the U.S. government that turn into material revenues for the company. In 2012, the company's revenues from the U.S. government totaled $11 billion out of a total $57.7 billion in revenues earned by the company. Government Austerity resulted in a fall in military engine shipments. The cut in the government's defense budget also affected the sales of Sikorsky and UTC Aerospace Systems that produce aviation components.

From the chart above, you can see the U.S. defense budget will remain stagnant from 2012-2017. So, the main growth for the company from products served to this industry will come from areas outside the U.S. in the coming years.

Forecasts of economic growth in developing countries such as in the Asia Pacific region will trigger more business for defense suppliers. China also recorded a double digit growth in its military budget from 2008-2013. According to Forecast International, China's defense allocation will increase by 41% by 2017.

Commercial Aviation

The commercial aviation industry got hit by economic crises over the past few years. However, global recovery in the coming years, as forecasted, will increase passenger traffic in this industry. The following charts sets showcase the growth in this industry up until 2030. This increase allow the company to earn more revenues since, according to Boeing, over 33,000 commercial aircrafts will be required over the next two decades.

Source: Investor Meeting Presentation Source: Investor Meeting Presentation

Demand from developed markets like the U.S. and new aircraft demand from developing regions like Asia-Pacific and Latin America are resulting in more orders for aircraft manufacturers like Boeing (NYSE:BA) and Airbus (OTCPK:EADSF). As a result, these aircraft manufacturers are increasing their production rates and this in turn will augment shipment volumes of engines and aircraft parts manufactured by Pratt & Whitney and UTC Aerospace Systems segments.

Now let us discuss building and construction industry and its activities that influence around 50% of the company's revenue.

Building and Construction Market

This market also remained mixed in FY 2013 with growth from China offset by declines in Europe. The company's segments in this market include Otis and UTC Climate, Controls & Security business as referred earlier. The U.S. improvements in consumer sentiment and spending are likely to bring in growth in equity and housing markets. Economic conditions in Europe also seem to be recovering, as shown by PMI expansion over the past six months. In Asia, China will lead in contributing solid backlog for the company's commercial business, as construction starts and property transactions in the country also rose. Overall, the industry is projected to grow impressively by 30% from 2010-2015.

Year Ahead and Final Take

(click to enlarge)

Source: Investor Meeting Presentation

The company also plans to spend around $1 billion on share repurchases, as well as the same amount on acquisitions. Investors should be ready for more capital gains from the company's stocks. The company has plans to continue offering free cash flows equivalent to its net income. During the fiscal year that recently ended the company spent $1.2 billion for share repurchase and $151 million for acquisitions. The company is forecasted to deliver an EPS of $6.55-6.85 with revenues of $64 billion. Consensus estimates believe the EPS will be $6.82 and the revenue at $65.36 billion.

The chart above shows the company's target for EPS growth and share price appreciation for 2014. The construction industry, that was imposing a negative impact on the company's financial achievements, has been forecasted to recover along with the aerospace industry. They are expected to grow due to economic recovery. So, in my opinion, potential investors could jump in to make gains as the company's share price will reach the targets set by analysts.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Business relationship disclosure: The article has been written by a Blackstone Equity Research research analyst. Blackstone Equity Research is not receiving compensation for it (other than from Seeking Alpha). Blackstone Equity Research has no business relationship with any company whose stock is mentioned in this article