Wachovia Downgrades Boeing (BA) To Market Perform; Defense Growth Is Unlikely To Offset Commercial

April 1, 2009 7:45 AM EDT

Wachovia downgrades Boeing Company (NYSE: BA) to Market Perform. Lowers valuation range from $51-54 to $38-40.

Wachovia analyst says, "Given the declines in traffic, financing and overall aircraft demand, we expect BA to announce 2010 commercial jet production cuts within the next few months; only the magnitude is unclear. If BA were to announce a 10-15% cut, we believe investors will assume that another cut will be needed. If BA were to announce an immediate 30+% cut, we believe the cash flow/EPS impact would be far more significant than current Street expectations...Given the more conservative aircraft build rate and margin assumptions, we are lowering our 2009E EPS to $5.20 from $5.25; cutting our 2010E to $4.80 from $5.35; and introducing 2011E EPS of $4.45...We believe the current stock price is consistent with the sum of parts multiples of a defense contractor plus a commercial aircraft supplier. In the last downturn, the valuation of Boeing approached the stand-alone value of just the defense portion."

To see more analyst ratings on BA Click Here.

The Boeing Company (Boeing) is involved in the design, development, manufacture, sale and support of commercial jetliners, military aircraft, satellites, missile defense, human space flight, and launch systems and services.

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