UPDATE: Canaccord Genuity Cuts Boeing (BA) to Hold on Cycle Concerns

(Updated - March 3, 2016 9:43 AM EST)

Canaccord Genuity downgraded Boeing (NYSE: BA) from Buy to Hold with a price target of $135.00 (from $150.00). Analyst Ken Herbert noted softness in aircraft retirements.

"We see incremental risk to the FCF outlook from 777 rate and pricing pressure, and additional backlog risk due to increased airline investment in older aircraft as oil prices have remained depressed. We now model in peak industry deliveries in 2019, and now believe the probability of Airbus and Boeing hitting the 57-60/month rates on the narrow-body aircraft is lower. Moreover, we believe concerns about the commercial cycle will limit multiple expansion for BA even as deliveries increase in 2017-2019," said Herbert.

The analyst added, "We believe retirements are a key factor, and the 2016 retirements through February of just 15 aircraft as compared to 69 in the same period in 2015 is a warning sign. While passenger traffic remains robust, we believe the increased demand for, and usage of, older aircraft in a lower oil environment will eventually impact the backlogs. We believe lessors are starting to see increased slot availability while demand for lease extensions remains very strong. We also believe pricing pressure is increasing, and lease rates on the newer generation aircraft could be under greater pressure than expected."

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 $119.65 yesterday.

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