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Boeing's (BA) Capital Deployment Decision in Dec. Expected to Be Catalyst for Shares, Says Deutsche Bank

December 1, 2015 9:43 AM EST
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Price: $191.95 --0%

Rating Summary:
    23 Buy, 14 Hold, 3 Sell

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Today's Overall Ratings:
    Up: 10 | Down: 8 | New: 10
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Deutsche Bank maintained a Buy rating on Boeing (NYSE: BA) with a price target of $175. Analyst Myles Walton expects Boeing's capital deployment decision on December 14, and he thinks the news serve as year-end catalyst, with a dividend hike of 15% and a $12 billion buyback authorization.

"We expect Boeing’s board to announce the outcome of their annual capital deployment meeting on December 14, 2015. The release dates for the last two years were after the close of markets on December 15, 2014 and December 16, 2013. We expect the company to announce both a material dividend increase (15%) and an increase to their outstanding share repurchase authorization (increase authorization to $12B)," said Walton.

"We are modeling a (Street-high) 15% increase in BA’s annual dividend following the 25% increase in December 2014 and the 50% increase in December 2013, which would imply a 2016 div yield of 2.7%. We continue to see the dividend as one of the best signals for investors to get confidence in sustainable cash flow growth (implied payout ratio on DBe 2016 EPS would be 44%). Going into December 2014, the consensus expectation was for a 14% dividend increase vs. the 25% increase realized. The stock responded and rallied from $121 to $158 by the end of Feb ‘15 on the back of the cash flow thesis (but hasn’t been able to get back to that level since). An upside surprise to capital deployment in Dec could be the needed ingredient for the stock to make a move higher into year-end," added the analyst.

For an analyst ratings summary and ratings history on Boeing click here. For more ratings news on Boeing click here.

Shares of Boeing closed at $145.45 yesterday.



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