Canaccord Genuity analyst Kenneth Herbert weighed in with a few insights on Boeing Co (NYSE:BA), after the company hosted its annual investors day on Tuesday, May 12. BA’s investor day conveyed a tremendous amount of information, but not a lot was incremental to the story. The analyst also maintained a Buy rating on the stock, with a price target of $165, which represents a potential upside of 13% from where the stock is currently trading.
Herbert noted, “Boeing hosted its 2015 Investor Day and, as expected, there were few surprises. The company set out to increase investor confidence in both the commercial aerospace cycle, the company’s ability to execute on the 787 and the cash flow upside as commercial rates continue to increase, and the cost structure is improved. We believe the company was largely successful as investor confidence in the out year cash flow upside has increased, in our view.”
Furthermore, “Regarding the commercial cycle, Boeing management is indicating it is seeing no increase in pricing pressure; cancellations and deferrals are running at historically low levels; and replacement rates are holding at 40-50% of deliveries. Moreover, management is confident it will see a renewal of the Ex-Im charter this summer, potentially for up to 5 years. There has been over ordering by some LCCs in Asia, but limited to under 5% of the backlog.”
Bottom line, “We see upside to 2015 FCF guidance (we are at $7B), and we believe that as confidence in 787 execution and the commercial cycle hold up, they will be positive catalysts for the stock.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Ken Herbert has a total average return of 16.2% and a 67.2% success rate. Herbert has a 8.5% average return when recommending BA, and is ranked #281 out of 3602 analysts.