Markets & Finance

Analyst Picks and Pans: Boeing, Limited Brands


What Wall Street analysts are saying about selected stocks in the news Monday

Boeing (BA)

Cowen & Co. downgrades to underperform from neutral

Analysts cut their ratings and estimates Monday for Boeing after the airline manufacturer said it would reduce production of some jetliners next year due to the global economic crisis.

Cowen & Co. analyst Cai von Rumohr reduced his rating for Boeing to underperform from neutral, citing its exposure to Pentagon program cuts announced last week by Defense Secretary Robert Gates. The analyst estimates profit to be $4.35 per share next year and $3.65 per share in 2011. In a note to investors, von Rumohr said continued drops in revenue per passenger mile will likely result in "growing pressure" for additional production cuts. And lower oil prices and limited credit available to airlines will restrain replacement when the industry begins to turn up again, he said.

Jefferies & Co. Inc. analyst Howard Rubel reduced his 2009 earnings estimate to $4.75 per share from $5.35 per share. He also cut his 2010 estimate to $5.10 per share from $5.90 per share and to $5.20 per share from $6 per share for 2011. Rubel also cut his price target to $52 from $60 and maintained a "Buy" rating.

Rubel said in a note to investors he expects a cut in production of the 777 in mid-2009, but believes production will increase for the 767. The delay in production of the 747-8 is not surprising because of the weaker market and development delays, he said. Rubel previously reduced his estimated 747 schedule, but did not expect an impact on earnings. And he said he expects a decline in production of 737s by mid-2010, though the line is overbooked. "Some domestic markets outside of the U.S. are starting to show some improvement in traffic, however," Rubel said.

Analysts surveyed by Thomson Reuters expect profit this year to be $5.06 per share, $4.93 per share next year and $4.57 per share in 2011.

Boeing has been struggling with sharply lower orders for commercial planes this year as air travel wanes. Airlines have cut flights and some have delayed orders and deliveries of new jets. Tighter credit markets also have made it more difficult for potential buyers to get loans for new planes.

The Chicago-based company said April 9 it will reduce monthly production of its twin-aisle 777 to five airplanes from seven starting in June 2010. Boeing also said it will delay earlier plans to slightly increase production of its 747-8 and 767 planes. The company expects the changes will result in an unspecified number of new job cuts.

Limited Brands (LTD)

Citigroup downgrades to hold from buy

Citigroup analyst Kimberly Greenberger downgraded Limited Brands (LTD) to hold from buy, saying the stock's risk/reward is less compelling. She says although she believes the recent surge in its share price is well justified given the company's strong dividend, solid liquidity, long-dated debt maturities and achievable EPS estimates, she would prefer an entry point below $9.

However, Greenberger still believes Victoria's Secret (VS) is well positioned in recessionary environment, and long term believes VS will likely come out of this recession in a stronger competitive position. She keeps $10 price target on Limited Brands shares.


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