Boeing Analyst: Crisis Of Confidence In Plane Manufacturer 'Justified'

Investor questions around Boeing Co’s BA guidance for the rest of 2020 and into 2021 and 2022 indicate a lack of conviction in the company's commentary, according to BofA Securities.

The Boeing Analyst: Ronald Epstein maintained a Neutral rating on Boeing and reduced the price target from $195 to $175.

The Boeing Thesis: Boeing has historically lagged the industry in announcing its plans to navigate challenges in the macro environment, Epstein said in a Friday note. (See his track record here.)

Boeing seemed “obsessively focused” on cost reduction and cash flow generation during its second-quarter earnings call, and there is lack of clarity regarding how the company plans to meet the challenges of "the most severe downturn in commercial aviation history," the analyst said. 

“In our view, the emerging crisis in investor confidence is justified,” he said.

while emphasizing that focusing on cost-cutting and cash flow generation will not work in today's environment.

Boeing needs to focus on “ensuring safety through a return to engineering excellence and investing for the future of commercial aerospace,” Epstein said.

The company has essentially become “a show-me story,” and investors are looking at management and the board to prove that they have what it takes to “successfully navigate the turbulence in commercial aviation,” according to BofA.

BA Price Action: Shares of Boeing were trading down by 2.12% at $158.51 at last check. 

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