Boeing(BA-NYE) Morgan Stanley initiates with Underweight on industry weakness

STA Research
by: STA Research

Morgan Stanley’s analyst Kristine Liwag today initiated Boeing with a Underweight rating, and a $181 target.  The basis of Kiwag’s Underperform rating is she believes that under the current COVID-19 restrictions, the aerospace stocks should not trade at a premium until the current environment eases and production levels  improve. The analyst states that Boeing’s increase in it’s free cash flow is  a sign of the “early commercial aerospace up-cycle multiple”.  The main justification for the Underweight rating is the high risk to aircraft cancellations for the 737 MAX, as the analyst believes there is significantly better opportunities in the aftermarket space in the same sector. 

 

STA Research(stocktargetadvisor) has a average target on the stock of $182 and a consensus Buy rating. STA’s view of the stock is Slightly Bearish with a score of 3.7 out of 10, where 0 is very bearish and 10 very bullish.

What to like:
High market capitalization
This is one of the largest entities in its sector and is among the top quartile. Such companies tend to be more stable.
Positive free cash flow
The company had positive total free cash flow in the most recent four quarters.
Superior Dividend Growth
This stock has shown top quartile dividend growth in the previous 5 years compared to its sector

 
What to not like:
Overpriced compared to earnings
The stock is trading high compared to its peers on a price to earning basis and is above the sector median.
Negative cashflow
The company had negative total cash flow in the most recent four quarters.
Overpriced on free cash flow basis
The stock is trading high compared to its peers on a price to free cash flow basis. It is priced above the median for its sectors. Proceed with caution if you are considering to buy.
Low Earnings Growth
This stock has shown below median earnings growth in the previous 5 years compared to its sector
Low Revenue Growth
This stock has shown below median revenue growth in the previous 5 years compared to its sector

 

 

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