Boeing's 737 Turbulence - BofA Analyst Sees Light At The End Of The Runway
Portfolio Pulse from Lekha Gupta
BofA Securities analyst Ronald J. Epstein maintains a Neutral rating on Boeing Co (NYSE:BA) with a price target of $225, despite the FAA's halt on 737 production. The halt is expected to pressure Boeing's 2025/2026 production and FCF targets but is seen as beneficial in the long term for a stronger production system. The analyst raised FY24 and FY25 EPS estimates but lowered FY26 forecasts due to new quality defects in 737 Max airplanes discovered by Boeing's supplier, Spirit AeroSystems Holdings Inc (NYSE:SPR), potentially delaying deliveries. Boeing's Q4 revenue increased by 10% YOY, with an adjusted loss per share improvement.
February 05, 2024 | 5:55 pm
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NEGATIVE IMPACT
Spirit AeroSystems Holdings Inc (NYSE:SPR), Boeing's supplier, discovered new quality defects in 737 Max airplanes, potentially delaying near-term deliveries.
The discovery of new quality defects by Spirit AeroSystems could negatively impact its stock in the short term due to potential delivery delays and the associated costs of rectifying these issues. This situation underscores the challenges in the supply chain and quality control, potentially affecting investor confidence.
CONFIDENCE 75
IMPORTANCE 75
RELEVANCE 80
NEUTRAL IMPACT
Boeing maintains a Neutral rating by BofA with a $225 price target despite 737 production issues and new quality defects. Analysts see long-term benefits and have adjusted EPS estimates.
The neutral rating and unchanged price target by BofA, despite the production halt and new defects, suggest a balanced short-term impact on Boeing's stock. The long-term positive outlook and adjusted EPS estimates indicate potential resilience, but the immediate challenges could temper investor enthusiasm.
CONFIDENCE 80
IMPORTANCE 85
RELEVANCE 90