Boeing Analyst Cuts Boeing Price Target On Further 787 Delivery Delays

Boeing Co BA has struggled with several production issues in its 787 program in recent years. In anticipation of further production delays, on Monday one analyst once again cut his 787 delivery targets and price target for Boeing stock.

The Analyst: Bank of America analyst Ronald Epstein reiterated his Neutral rating for Boeing and cut his price target from $245 to $220.

Related Link: Is Boeing's Stock Overvalued Or Undervalued?

The Thesis: Epstein also cut his fourth-quarter 787 delivery estimate from four to zero and reduced his 2022/2023 787 delivery targets from 70/70 to 36/66.

“While the manufacturing issues do not appear to be safety of flight risks (as in-service fleet has not been parked), we view the continued manufacturing issues in a quite mature stage of the 787 program as a red flag and are concerned about what this could imply about Boeing’s engineering health and timely quality control,” Epstein said.

Epstein said Boeing faces several near-term headwinds, including difficulty in ramping production back up with increased quality oversight, lack of employee expertise in re-worked tasks, reduced commonality of fixes to the 787 parked fleet and potential fixes for the in-service fleet. Bank of America estimates Boeing will be able to fix roughly two aircraft per month.

Fortunately for Boeing investors, Epstein said Boeing’s company-specific problems will be largely offset by a broad-based recovery in the commercial aerospace market in 2022 and beyond.

Boeing has delivered more than 1,000 787s over the past decade, but the 737 accounts for about 40% of the company’s EBIT.

Benzinga’s Take: The entire air travel industry took a huge hit during the pandemic, but Boeing clearly has its own unique set of problems. Boeing shares are 11.2% year-to-date in 2021, while competitor Embraer SA ERJ is up 106.9%.

Photo: Courtesy Boeing