Aerospace Industry Faces More Downgrades, But Recovery Expected, Says Analyst

Zinger Key Points
  • Stifel analyst considers Boeing's expected $35 per share offer for Spirit AeroSystems reasonable, valuing Spirit at around $4.1 billion.
  • Truist analyst notes ongoing challenges for commercial aerospace OEMs and expects further downward revisions in the supply chain.

Stifel analyst Bert W. Subin expressed his view on The Boeing Company’s BA reported proposition to acquire Spirit Aerosystems Holdings, Inc. SPR in a deal valuing the company at approximately $35 per share.

Subin says that if confirmed, the buyout aligns with their expectation that Boeing would aim to offer a price reflecting a reasonable premium compared to Spirit’s pre-announcement trading level (estimated around 20%, which would represent approximately 22%).

The analyst adds that they view the $35 per share offer as reasonable for both Boeing and Spirit AeroSystems and would value Spirit AeroSystems at around $4.1 billion.

Based on Boeing’s closing price of $179.10 on Monday, acquiring Spirit AeroSystems at this price would require approximately 22.7 million shares of Boeing (~4% dilution), assuming an all-equity transaction, with potential refinancing or repayment of debt afterward, writes the analyst.

Related: Boeing Nears Deal To Reacquire Spirit AeroSystems In Wake Of Airbus Negotiations: Report

Apart from this, Airbus SE EADSY, Boeing’s European competitor, revised its 2024 adjusted earnings lower by roughly EUR5.5 billion (approximately $5.9 billion), which weighs down on Boeing shares today.

Truist analyst Michael Ciarmoli writes that they anticipated ongoing challenges for commercial aerospace OEMs this quarter.

However, with this downward revision and recent production delays at Boeing, the analyst anticipates these factors to further amplify downward revisions throughout the supply chain.

Ciarmoli reaffirmed confidence in the long-term recovery of commercial aerospace OEMs, having thoroughly evaluated exposure across platforms and identified potential upside within the coverage universe.

Boeing stock has lost around 15% in the last 12 months. Investors can gain exposure to the stock via IShares U.S. Aerospace & Defense ETF ITA and Invesco Aerospace & Defense ETF PPA.

Price Action: BA shares are down 2.8% at $174.08 at the last check Tuesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo via Shutterstock

Market News and Data brought to you by Benzinga APIs
Price Target
Posted In: Analyst ColorEquitiesLarge CapM&ANewsAnalyst RatingsTrading IdeasAI GeneratedBriefsExpert IdeasStories That Matter
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!