Berenberg Upgrades Boeing On 737 Max Prospects

The restart of Boeing Co BA 737 Max deliveries in December 2020 “marks a turning point” toward the company’s financial recovery, according to Berenberg.

The Boeing Analyst: Andrew Gollan upgraded Boeing from Sell to Hold and raised the price target from $150 to $215.

The Boeing Thesis: Although the company has more than $60 billion in gross debt due to the 737 Max crisis and the COVID-19-induced downturn, the stock appears fairly valued, with “sentiment risks balanced between recovery potential and ongoing near-term headwinds and virus uncertainty,” Gollan said in the upgrade note.

The worst seems to be in the rearview mirror for the 737 Max, the analyst said.

“Now that Max deliveries are underway, we do not expect significant new charges. We estimate that c$8bn of cash costs remain outstanding, the majority of which will be paid in 2021. The cash burden then recedes and, helped by rising volumes, Boeing’s cash generation should greatly improve from 2022,” he said.

Despite the Boeing upgrade, Gollan said he prefers Airbus “based on its overall quality and underlying growth potential.”

BA Price Action: Shares of Boeing were up 0.58% at $211.93 at last check Wednesday. 

Photo courtesy of Boeing. 

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