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Bear Thesis In Boeing 'Continues To Look Overstated'

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Bear Thesis In Boeing 'Continues To Look Overstated'

Deutsche Bank's Myles Walton reiterated a Buy rating and $160 price target on shares of Boeing Co (NYSE: BA). The analyst laid out both the bull and bear cases, but remains bullish on the stock.

"We won’t try to argue with the bear point that the aerospace industry is late into an upcycle; however, we think nearly all of the other bear concerns are overstated or already more than factored into estimates/valuation," Walton noted.

Specifically, Walton mentioned "the least foundational bear points" as "concerns on the narrow-body demand, a lack of appreciation in the 787 profit potential and the obsession that a new plane is a bad thing."

"With the stock significantly underowned and cash flow valuation on its lows, there is ample room for the stock to make a run on a couple quarters of execution," according to Walton.

Despite the conviction against the bears, Walton pointed to ten things bulls in Boeing should watch out for. He noted several of the largest items:

  • Lack of demand on the 777;
  • The medium-term competitive impact of a stronger dollar;
  • Airline behavior changes as traffic growth slows from the current above-trend growth rate.

Boeing shares closed Monday's session up 2.3 percent at $132.75.

Latest Ratings for BA

DateFirmActionFromTo
Nov 2019MaintainsEqual-Weight
Oct 2019MaintainsNeutral
Oct 2019MaintainsBuy

View More Analyst Ratings for BA
View the Latest Analyst Ratings

Posted-In: Deutsche Bank Myles WaltonAnalyst Color Long Ideas Analyst Ratings Trading Ideas

 

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