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Boeing Gets Downgrade From Wolfe on Valuation Concerns

The stock now has 'more downside potential than upside risk,' says Wolfe analyst Hunter Keay.
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Boeing  (BA) - Get Free Report shares fell Thursday after Wolfe analyst Hunter Keay downgraded the world’s second biggest plane maker to underperform from peer perform on valuation concerns.

He has a share-price target to $149.

Boeing stock recently traded at $181.55, down 3.4%. While it has dropped 45% year to date, it also has soared 90% from its closing low March 20.

The stock now has “more downside potential than upside risk,” Keay wrote in a commentary.

Boeing’s trailing price-earnings ratio totals 49.09, up from its five-year average of 24.44, according to Morningstar.

The coronavirus is another headwind for Boeing, Keay said. The pandemic is “relatively worse in the U.S. than it is in the rest of the world, creating financial weakness in a financially strong segment of BA’s customer base,” he said.

Keay noted that Boeing has planned a decrease in “737 and 787 deliveries through 2023, cancelled the 747 at the end of 2022, and pushed the 777X EIS out to 2Q22.”

In addition, “we fear demand consequences if BA is unable to pursue the derivative certification process for the 777X,” he said.

Boeing released second-quarter delivery numbers Tuesday, and they weren’t pretty for the commercial side.

Boeing delivered a total of 20 commercial jets during the quarter, down 78% from 90 a year ago, thanks largely to the coronavirus pandemic.

Deliveries of 737 planes dropped to 4 from 24, and 787 deliveries slumped to 7 from 42. Boeing has delivered 70 commercial airplanes year to date, down from 239 in the first half of 2019.