Baird initiated coverage on Boeing with an outperform rating and 161 price target, citing a "robust backlog." Analyst Peter Arment said the aerospace giant will generate $23 billion in free cash flow from 2016 to 2018, with $15 billion available for buybacks after paying dividends.
But Arment warned in the note that Boeing faces a risk from Airbus as the A320neo family has been outselling the 737 Max family and now has 59% of the market share.
Boeing's 777 production bridge is also a risk, as there is still pressure on wide-body orders, according to Arment. The company has been trying to maintain its 777 production rate to ensure a smooth transition to the next-generation 777X, but orders for the older model have been drying up as customers prefer to wait for the new one.
Shares ended 0.2% lower at 134.42 in the stock market today. Boeing is consolidating in a flat base as its shares continue to climb about its 50-day line.
Also Thursday, Boeing announced that third-quarter deliveries fell 5.5% year over year to 188 planes. Deliveries of its 737 fell to 120 from 126, 787 deliveries fell to 36 from 37 a year ago, and 777 deliveries were flat at 22.
Airbus said Thursday that it delivered 62 planes in September, up 26.5% from a year ago, including 10 A321neos and 10 A321 current engine option aircraft to VietJet. The European aerospace giant also reported new orders and bookings for 49 planes last month.
U.S.-listed shares of Airbus fell 1.1% to 15.16.
(Gillian Rich - Investors Business Daily News)