Boeing Is Taking The Right Steps To Improve Productivity

During its investor event on May 11 and 12, Boeing Co BA provided a review of its markets and strategies.

Jefferies’ Howard A. Rubel maintained a Buy rating on the company, with a price target of $165.

Making Progress

“The drive to improve productivity is making progress, as indicated by the ahead of schedule work on the 737 and 787-10. Management boosted its cash return to shareholders to 100 percent of FCF,” Rubel mentioned.

The analyst believes that Boeing has established development schedules that appear to appropriately account for risk, as evidenced by the 737 MAX, 777X and 787-10 programs.

The company has also increased automation to enhance the assembly of the 737 wings, while using other automation technology to build the 777 and 777X fuselage.

“The plan and ability to build on several technology advances should mean that risks are eliminated earlier in the 777X program than they were for the 787,” Rubel stated, while adding, “Experience with the new fuselage automation techniques is being proven ahead of high rate production, eliminating unknowns.”

Expectations

Rubel believes that defining the middle of the market plane and developing the next model for the 737 MAX could entail risk. The analyst estimates revenue growth at 2.5 per year till 2018.

Commercial deliveries are expected to rise from 742 in 2016 to close to 850 in 2018, “with the bulk of the increase is from 737 MAX volumes and the Tanker, but offset by 777 declines,” Rubel added.