What Analysts Have Said After Boeing Q2 Earnings

Here is a look at what several analysts had to say about the company after Wednesday’s earnings report.

Ken Herbert at Canaccord Genuity reiterated the firm’s Buy rating on the stock and maintained the $165 price target it set at the end of the first quarter. Herbert sees the primary headwinds for Boeing stock to be investor concerns with the buying cycle and the global economy. A more specific concern remains the 777 bridge program to the new 777X and the lack of a decision from Boeing on whether the company will raise the 737 production rate to around 60 a month.

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Credit Suisse’s Robert Spingarn raised the firm’s price target on Boeing stock from $152 to $156 per share while reducing earnings per share (EPS) forecasts for 2015, 2016 and 2017 from $8.55, $9.41 and $10.42 to new estimates of $7.85, $9.23, and $10.30, respectively. Credit Suisse rates the stock as Neutral. The firm raised the price target following an adjustment to its estimate of free cash flow. Spingarn noted Boeing’s strong fundamentals, strong free cash flow and above-expectation share buyback. He was also pleased that new CEO Dennis Muilenburg indicated that productivity and shareholder returns would remain top priorities.

Wells Fargo reiterated its Outperform rating on the stock and raised its estimate of adjusted EPS for 2015 from $7.68 to $7.90 and maintained its 2016 full-year EPS estimate of $9.55. The analysts noted that deferred production costs on the 787 program increased by $790 million in the second quarter to a total of $27.7 billion. Wells Fargo expects a similar size increase in the third quarter but looks for lower increases to the deferred costs. The firm’s valuation range on Boeing stock is $163 to $166 and it categorizes risks as reaching that level on weak orders, production cuts, delays and cost overruns, and disruption to the supply chain.

Bank of America Merrill Lynch reiterated its Neutral rating on Boeing stock and its $150 price target. The firm said:

In our view, Boeing may trade at a premium to the market multiple of 15x as investors view the company as a relatively safe investment compared to other large-cap industrials stocks with more direct energy exposure.

As was the case with other analysts, Merrill Lynch noted that Boeing lowered EPS guidance from a prior range of $8.20 to $8.40 to a new range of $7.70 to $7.90, as a result of the $536 million after-tax charge against the KC-46A military tanker program. Also like other analysts, Merrill Lynch focused on the company’s strong performance rather than the huge charge.

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In the late morning Thursday, Boeing stock had added about 0.9% to trade at around $147.77, in a 52-week range of $116.32 to $158.83. The consensus price target on the stock is $164.55.