Boeing Double-Upgraded as 'Covid-19 Recovery Play With Upside'

Boeing was double-upgraded to overweight at Morgan Stanley, with analyst Kristine Liwag calling it 'a covid-19 recovery play with upside.'
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Boeing was double-upgraded to overweight from underweight at Morgan Stanley, with analyst Kristine Liwag calling the Chicago aerospace giant "a covid-19 recovery play with upside."

She lifted her share-price target to $230 from $165. Boeing recently traded up 0.5% at $198.20. The new price target indicates 17% potential upside from Thursday's close.

The stock had slumped 38% in the past year through Thursday amid the company's miscues and the ravages of the Covid pandemic. It has also rebounded 33% over the past three months.

Boeing got all the bad news out in its “kitchen sink” earnings report on Wednesday, sending earnings estimates down and providing a “clear runway for Boeing” stock, Liwag said, according to Bloomberg.

Morningstar analyst Burkett Huey puts fair value for Boeing at $257. 

“We think the most optimistic news is that airlines have retired about 1,300 aircraft since the start of the covid-19 crisis, which would represent roughly 6% of the total pre-covid fleet and around 25% of roughly 5,400 pre-covid aircraft older than 15 years old,” he wrote on Wednesday.

“While we expect airlines will primarily focus on deleveraging after the pandemic, we think they will be able to use sale-leaseback transactions to take delivery of the aircraft. 

"Aircraft deliveries are obligations to the customer, so airlines may take delivery even if they would prefer to focus on their balance sheets. As evidence, Boeing and Airbus EADSY delivered 749 aircraft in 2020, which was the worst year in aviation history.”

Weakness in Boeing’s earnings report still led him to lower his fair-value estimate from $260.