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Boeing Shares Up 43% as Demand Zeal Trumps 787 Trauma

Stocks in this article: BA

What are the perceived risks? UBS analyst David Strauss wrote in a recent report that his firm sees the "risk to the sustainability of all-time high production rates at Airbus/Boeing," while Solomon noted that perhaps the most important constraint on the manufacturers' ability "to accelerate production rates is the supply chain, not lack of market demand. Monitoring suppliers and addressing problems will therefore remain a top priority.

"Although we have modest concerns about some of the larger, one-off orders placed in recent periods by less creditworthy, low-cost carriers, we believe that most of the strong demand for existing and next-generation aircraft by airline customers is wholly warranted," he added. "Further dispelling the notion of an aircraft 'order bubble' is the fact that the order book is increasingly well diversified, both from a customer and a geographic perspective."

Sterne Agee analyst Peter Arment said Boeing's share price can continue to rise "as investors grow more confident in the 787 execution, free cash flow and catalysts tied to the 777X launch and 787-10 accounting impact." Arment said he expects the 777X launch could occur at the Dubai Air Show in November. He has a "buy" rating and a $120 price target on the stock.

Last week, Boeing displayed the first 787-9 at its plant in Everett, Wash. While the 787-8 can carry 210 to 250 passengers on routes of 7,650 to 8,200 miles, the 787-9 can carry 250 to 290 passengers on routes of 8,000 to 8,500 miles. Boeing is slated to roll out and fly the second 787 model late this summer, with first delivery scheduled to Air New Zealand in mid-2014.

-- Written by Ted Reed in Charlotte, N.C.

>To contact the writer of this article, click here: Ted Reed

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