Boeing Co BA CEO Dennis Muilenburg told surprised analysts the company was increasing production of its flagship 787 Dreamliner from 12 a month in 2019 to 14, prompting Jefferies analyst Howard A. Rubel to rate the airline a Buy with a price target of $275.
Boeing was trading at $245.24 at last check, up 1.37 percent.
Production Increase Bodes Well
Muilenburg shared the news with analysts on Wednesday, which Rubel called “a bit of a positive surprise to investors, as this type of decision usually means the company is confident that the rate can last a couple of years.”
“Given the lead-times, we figure this announcement could raise 2019 deliveries by about 8 to 10 aircraft vs. prior estimates and drive deliveries of the 787 to about 165 aircraft for 2020,” he said. “We currently project deliveries of 142 units in 2019 and 2020.”
Assuming a cost of $145 million per wide-body and cash margins of about 24 percent, then revenue and profit from the increase could be in the neighborhood of $3.3 billion and $800 million, respectively, in 2020, he said.
Related Link: What’s Next For Boeing, Dow’s Biggest Winner Of 2017
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