Ahead of the Bell: Boeing
NEW YORK (AP) — Oppenheimer & Co. upgraded Boeing, believing that investors have focused too much on macroeconomic issues and slowing commercial aircraft orders and too little to the potential for the company's 787 aircraft.
Analyst Yair Reiner believes the success of the 787, also known as the Dreamliner, has the potential to hold up Boeing's earnings and stock price even through spotty economic growth. And while revenue benefits from the new plane will likely unfold over a long period of time, he sees July's Farnborough Airshow — one of the year's biggest aviation events — as a catalyst.
Reiner established a $90 price target on the stock, implying possible 25 percent growth from its closing price of $71.96 on Friday. Reiner
"Given years of delays and disappointments, it's easy to overlook that the 787 really is a big deal," Reiner said Sunday. "If manufacturing issues are indeed being resolved, the 787 represents the bulk of Boeing's top-line growth in the years ahead."
The program still faces hurdles ahead, though. Reiner notes the company is aiming to raise production rates three times through late next year, it's working through a large number of partially completed planes and also trying to reduce costs.
And given weakness in the global economy, the analyst says that orders could indeed remain sluggish. "But we don't believe this necessarily spells doom for Boeing's stock," he said, because of the company's strong backlog and the analyst's belief that sales of the 787 can hold up to cyclical weakness in commercial airplane demand.
Reiner upgraded shares to "Outperform," from "Perform."
Shares of Boeing Co. hit a year-low of $56.01 last August. Shares edged up 3 cents to $71.99 in premarket trading.