Citi analyst Charles J Armitage upgraded the aerospace and defense firm Boeing Co (NYSE: BA) to Buy/High Risk from Neutral and lowered the price target to $209 (implying an upside of 56.3%) from $219.
The analyst seeks to value Boeing on the assumption that the (significant) medium-term risks can be mitigated while also quantifying those risks.
Armitage expects 787 deliveries to resume soon and 737MAX to return to commercial service but mentions that these factors are “incrementally positive, rather than a step-change in risk.”
Related: Boeing Shares Take Off After China Southern Airlines Test Flight
Armitage states that if the 737MAX, 777X, and the 787 programs achieve Citi’s forecast levels of production and profitability, the estimated fair value will be $209/share (new target price), implying ~70% upside.
However, if the 737MAX and 777X only achieve Citi’s downside case, the estimated value will be $116/share, marginally below the current share price.
Also Read: Boeing Now Has a Liaison To Raise Concerns For Employees Who Work On Behalf Of FAA: WSJ
Lastly, the analyst states that Citi sees value at about $84/share, ~30% below the current price, if all three programs go badly.
Additionally, Armitage stated that Airbus SE (OTC: EADSY) is “materially lower risk and is our preferred global aerospace pick.”
Price Action: BA shares are trading lower by 0.36% at $133.24 on the last check Thursday.
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