Why This Spirit AeroSystems Analyst Made A Double Downgrade


Spirit AeroSystems Holdings, Inc. SPR subsidiary, Spirit AeroSystems Inc, raised $900 million in a debt offering.

Although the company is trying its best to diversify away from Boeing Co BA, it remains “mostly a 737 story,” according to BofA Securities.

The Spirit AeroSystems Analyst: Ronald Epstein upgraded the rating for Spirit AeroSystems from Buy to Underperform, while reducing the price target from $49 to $26.

The Spirit AeroSystems Thesis: Although the production of 737 could ramp from the current 31 per month to 50 per month by the mid-2020s, Boeing’s “strengthened focus on its own balance sheet and FCF generation adds pressure to SPR profitability,” Epstein said in the upgrade note.

Check out other analyst stock ratings.

The analyst mentioned that Spirit AeroSystems could generate free cash flows at 5% of sales by mid-2020s, “short of 7-9% conversion target.” He added, however, that the path to a cash flow turnaround is now more challenging and that restructuring the supply chain “could be difficult and risky.”

SPR Price Action: Shares of Spirit AeroSystems had declined by 2.45% to $28.64 Friday morning.

Also Read: Boeing Hosted Its First Investor Day In 4 Years After 737 MAX Debacle: What Do Analysts Think?

Photo: T. Schneider via Shutterstock

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Posted In: Analyst ColorDowngradesPrice TargetAnalyst RatingsTrading IdeasaerospaceaerostructuresairplanesBofA SecuritiesRonald Epstein
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