Spirit AeroSystems Jumps 5.5% On 3Q Sales Beat; Analyst Says Hold

Shares of Spirit AeroSystems Holdings rose 5.5% on Tuesday as the company’s 3Q revenues surpassed Wal Street’s estimates and liquidity improved. The aircraft manufacturing company’s 3Q revenues of $806 million topped analysts’ estimates of $780.7 million, but declined 58% year-over-year.

The company said that the 3Q revenue decline reflects “significantly lower 737 MAX production resulting from the grounding of the program and the impacts of COVID-19.” Spirit AeroSystems’ 3Q deliveries dropped 52.9% year-over-year to 206 shipsets. Boeing 737 MAX deliveries plunged to 15 shipsets in 3Q, down from 154 shipsets in the year-ago quarter.

Spirit AeroSystems (SPR) reported a 3Q loss of $1.34 per share that came in line with Street estimates. The company had earned $1.38 per share in the year-ago quarter.

The company’s CEO Tom Gentile said “We have made substantial progress on stabilizing our liquidity position and driving cost reduction actions to align with lower levels of production resulting from the MAX grounding and COVID-19 pandemic.” Spirit raised $900 million worth of capital on Oct. 5, terminated the Asco acquisition in September 2020 and completed the acquisition of certain Bombardier assets on Oct. 30, which is expected to improve its cash position and enhance its ability to tackle near-term challenges, it said. (See SPR stock analysis on TipRanks)

Following the results, Cowen & Co. analyst Cai Rumohr maintained a Hold rating on the stock with a price target of $21 (5.7% upside potential). The analyst said that “investors’ focus will be on (1) potential for additional MAX/787 rate cuts and (2) outlook for recent acquisition of Bombardier Aerostructures.”

Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 3 Buys, 4 Holds, and 1 Sell. The average price target of $21.86 implies upside potential of about 10.1% to current levels. Shares have tanked 72.8% on a year-to-date basis.

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