Morgan Stanley Highlights Boeing (BA) Shares As Attractive After the 13% Pullback
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Morgan Stanley analyst Kristine Liwag reiterated an Overweight rating and $274.00 price target on Boeing (NYSE: BA) citing 3 reasons to be buyers today:
1) Reuters repoted that the FAA issued an Airworthiness Directive (AD) to inspect 9,315 Boeing 737 aircraft globally regarding cabin altitude pressure switches. The analyst sees this as white noise, pointing out that this AD does not ground the fleet and does not change the outlook for the Boeing 737 MAX aircraft. FAA directed inspections of aircraft are normal course of business even before the Boeing 737 MAX grounding. In the last 60 days, the FAA has issued 98 airworthiness directives covering Boeing and Airbus aircraft as well as helicopters and engines.
2) Narrowbody demand appeared strong at the Paris Air Show. The analyst learned that demand for narrowbody aircraft remains strong with aircraft lessors noting airlines that cancelled narrowbody orders during the pandemic now want them back.
3) The analyst learned of increasing interest in the 737 MAX from Chinese airlines. Recertification of the MAX in China, which could come as soon as 3Q21, could trigger production rate increases and provide an order-positive tailwind for BA.
The analyst sees shares as oversold going into the company's earnings report next week and raised estimates. She stated "We updated our BCA revenue estimates for 2Q 2021 from ~$4.3bn to ~$6.5bn to reflect revenue arriving earlier in the year than expected. This raises our 2Q Mse revenues from $15.1bn to $17.3bn. We leave our 2021 revenue estimates unchanged at ~$35.3bn. Also, we leave our delivery forecast for full year 2021 unchanged. Notably, consensus revenues for BCA have come down from ~7.3bn to ~$6.7bn over the last couple weeks, more in line with our estimate of ~$6.4bn."
Shares of Boeing closed at $220.87 yesterday.
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