Morgan Stanley Upgrades Spirit AeroSystems, Despite 'Bumpy Road Ahead'

The market is likely to continue looking beyond Spirit AeroSystems Holdings, Inc.’s SPR near- and medium-term execution issues. Instead, there will be a focus on expectations of normalized earnings in 2025, according to Morgan Stanley.

The Spirit AeroSystems Analyst: Kristine Liwag upgraded the rating for Spirit AeroSystems Holdings from Underweight to Overweight, while raising the price target from $18 to $50.

The Spirit AeroSystems Thesis: The company is poised for a post-COVID-19 recovery, Liwag said in an upgrade note.

The “COVID-19 vaccine rollout through 2021, eventual easing of international borders, and improved airline booking trends are positive catalysts that also provide upside to new aircraft demand and are thus positive for OE supplier, Spirit,” she added.

The analyst further noted that the recovery in oil prices “increases the desirability of new aircraft, which could spur a replacement cycle once air traffic demand returns to 2019 levels.” Liwag now expects investors to “look out to 2025.”

SPR Price Action: Shares of Spirit AeroSystems had risen by 8.31% to $46.39 at the time of publication Monday.

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