Citi Turns Bullish On Boeing - Read Why

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  • Citi analyst Charles J Armitage upgraded the aerospace and defense firm Boeing Co BA to Buy/High Risk from Neutral and lowered the price target to $209 (implying an upside of 56.3%) from $219.
  • The analyst seeks to value Boeing on the assumption that the (significant) medium-term risks can be mitigated while also quantifying those risks.
  • Armitage expects 787 deliveries to resume soon and 737MAX to return to commercial service but mentions that these factors are "incrementally positive, rather than a step-change in risk."
  • RelatedBoeing Shares Take Off After China Southern Airlines Test Flight
  • Armitage states that if the 737MAX, 777X, and the 787 programs achieve Citi's forecast levels of production and profitability, the estimated fair value will be $209/share (new target price), implying ~70% upside.
  • However, if the 737MAX and 777X only achieve Citi's downside case, the estimated value will be $116/share, marginally below the current share price.
  • Also Read: Boeing Now Has a Liaison To Raise Concerns For Employees Who Work On Behalf Of FAA: WSJ
  • Lastly, the analyst states that Citi sees value at about $84/share, ~30% below the current price, if all three programs go badly. 
  • Additionally, Armitage stated that Airbus SE EADSY is "materially lower risk and is our preferred global aerospace pick."
  • Price Action: BA shares are trading lower by 0.36% at $133.24 on the last check Thursday.
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