Canaccord Raises Price Target for Boeing Co Following 1Q:15 Results


In a research note out today, Canaccord Genuity analyst Kenneth Herbert reiterated an Outperform rating on shares of Boeing Co (NYSE:BA), after the company reported its first-quarter results, posting EPS of $1.97, compared to Herbert’s estimate of $1.63 and consensus of $1.81. As a result, the stock’s price target has been slightly raised to $165 from a previous target of $160, which implies an upside of 6% from current levels.

Herbert stated, “Even with its strong Q1 results, Boeing did not change any of its full year 2015 financial guidance. The company expects cash flow to improve in H2/15, but margins, especially in BCA, to face headwinds from a slight uptick in R&D (777X) and mix as deliveries on the 787 and 747-8 step up in H2/15. We are maintaining our full year 2015 and 2016 EPS estimates of $8.75 and $9.75, respectively. However, based on a stronger buyback in the quarter than expected ($2.5B, or ~17M shares) we are lowering our full year shares outstanding to 700M.”

The analyst continued, “The key risks remain the 777 order bridge and 787 execution (and cash flow). Management sounded confident on the 777 order bridge, claiming it is at 25 so far in 2015 orders, or approximately 50% of its full year goal of 50. We continue to believe there are ~250 slots still to sell covering the 2018-2021 period. While we believe investors increasingly expect a rate reduction on the 777, this is not priced into the stock, in our view. If Boeing were to announce a rate reduction on the 777, we would expect this by early 2016, providing about 2 years of lead time. However, management sounded more confident in its ability to take rates higher on the 737, which we believe will ultimately step up to the ~60/month range.”

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 19.7% and a 70.4% success rate. Herbert has a 12.7% average return when recommending BA, and is ranked #252 out of 3577 analysts.

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