Boeing Reports Strong Commercial, Weak Defense

Deutsche Bank has published a research report on The Boeing Company
BA
which reported 3Q results ahead of expectations due to increasingly strong commercial margins. Defense, however, did not report results to the same effect. In the report, Deutsche Bank writes "We maintain our Buy and positive stance on the stock given earnings and cash flow growth potential as the aero cycle recovers and new products begin to deliver. We're modestly lowering our 2010 EPS estimate to $4.07 from $4.15, as BCA margins are offset by weaker defense EBIT and other expense/717 charge. Our 2011 & 2012 estimates go to $4.61 (from $4.86) and $5.60 ($5.72) for similar reasons as our 2010 adjustment, plus slightly higher unallocated pension expense. We are maintaining our $83 price target, which is based on 14.8x our 2012 EPS estimate, which is in-line with the company's historical trading average (5-years). Risks include product development on the 787 and 747-8 as they race to complete their respective flight test programs and move to increase production rates to fulfill demand, defense spending, as well as the overall economic environment." As mentioned above, Deutsche Bank maintains its Buy rating and $83 price target. The Boeing Company closed yesterday at $71.36.

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