Boeing Delays Don't Deter Analysts
SEATTLE (
) --
Boeing
(BA) - Get Report
backers are not deterred.
Despite
in 787 deliveries reported last week by
Aviation Week
, analysts continue to recommend shares in the aircraft maker.
|
On Tuesday, RBC Capital Markets analyst Rob Stallard reiterated an outperform rating on Boeing following a meeting with senior management in Chicago. Stallard said "management confirmed that 787 initial delivery is still on track to be 'well into' 1Q 2011 but that delivery of the 30 aircraft in various stages of final delivery will take longer than expected." He said he still expects that 24 aircraft will be delivered in 2011.
CEO Jim McNerney "still thinks that most of the risk in the ramp-up process will be retired after the first 40-50 deliveries," Stallard wrote.
Meanwhile, Davenport & Co. analyst Carter Leake maintains a buy rating on the share. Leake said the market is not overly concerned about the exact scheduling of the early aircraft deliveries. In an October report, he noted that 25 of the first 40 aircraft build by February 2011 "will require extensive re-work" and will therefore be delayed.
"While the timing of when Boeing ultimately delivers all 40 of these 're-work' aircraft will affect near-term estimates, investors are more focused on Boeing's ability to achieve their stated 10-per-month production rate by the end of 2013," Leake said Tuesday in an interview. "As long as Boeing is making steady progress towards this target production rate, we believe investors will look past the issue."
In the meeting with Stallard, McNerney also suggested "that the 777 build rate has the potential to go beyond seven aircraft per month, depending on the progress of the Airbus A350," Stallard said, while another 737 rate increase beyond 38 a month could come in the first half of 2011 "given robust demand."
It seems clear that Boeing remains
"Good Boeing," which mints money with the 737 and 777, while "Bad Boeing" uses the money to fund 787 delays.
As for Boeing shares, Stallard said "The progress of the aerospace upcycle is the most important driver for the stock," despite 787 risk. He said his outperform rating reflects that Boeing trades at 15 times his 2011 estimate.
Following the
Aviation Week
report on Friday, Boeing shares slipped about 1.7% in after-market trading. The shares closed Friday at $71.21 and opened Monday at $70.06. Shares traded Tuesday morning at $70.34, up 13 cents.
-- Written by Ted Reed in Charlotte, N.C.
>To contact the writer of this article, click here:
Ted Reed
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