Market Overview

Deutsche Bank Offers 3 Reasons To Consider Boeing


In a report published Friday, Deutsche Bank analyst Myles Walton offered three reasons why investors should consider buying shares of Boeing Co (NYSE: BA)

"The market remains divided on Boeing," Walton wrote. "There is supporting evidence for both sides, but we squarely fall into the bullish category and think some of the data in the most recent filing further bolster the case for the stock to remain a relative outperformer in 2015."

Walton noted:

  1. Both the 787 and 747 cost allocation to the end of the accounting quantity has declined for the first time.
  2. The implied cash margins on the 787 in 2020 are close to 30 percent and even if that's 50 percent wrong, the market doesn't seem to want to give credit.
  3. The decision to exclude the 777X from the current 777 accounting is "relatively bullish" to 2015 and 2016.

Walton expanded and stated that using Boeing's disclosures in its 10K filings, each 787 aircraft in 2020 will generate a cash profit of $40 million per aircraft or a $13 billion pre-tax swing versus 2014. The analyst added that in the near-term cash will be a "significant driver" to the stock and the company is on a path to achieve $14 per share in free cash flow in 2016 despite 777 production cuts.

Shares remain Buy rated with a $175 price target.

Latest Ratings for BA

Jan 2021BernsteinDowngradesMarket PerformUnderperform
Dec 2020RedburnDowngradesNeutralSell
Dec 2020UBSUpgradesNeutralBuy

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Posted-In: 747 777 787 aircraft Deutsche Bank Myles WaltonAnalyst Color Analyst Ratings

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