Boeing (BA) investors have been fretting about the possibility that deliveries will be deferred due to the slow economy. But Bernstein Research analyst Douglas Harned “continue[s] to see the company’s delivery plan as well-supported through 2015″ and thinks the stock is undervalued.
“We expect Boeing to deliver all of its planned airplanes through 2015, as emerging market demand and the need for replacement aircraft should sustain rising production rates. Even during the 2009-10 economic downturn, we saw a negligible decline in deliveries at a time when global GDP actually declined. This time we do not expect global GDP growth to turn negative. Instead, we expect a smaller number of delivery deferrals to occur, with slots that may open picked up by airlines seeking earlier deliveries.”
Harned also thinks that Boeing has made progress in ramping up 787 production, with the possibility of the company making five of the planes a month by the end of the year getting better. And while its defense business could slump, that shouldn’t hurt the stock too much.
Harned raised his rating to Outperform with an $92 price target. Boeing shares rose 3.3% in Tuesday afternoon trading to $72.46.
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