Aerospace & Defense

S&P Lowers Boeing (BA) on Delay, Sort Of....

Douglas A. McIntyre

BOEING (NYSE:BA) Downgraded to “BUY” from “STRONG BUY” by Standard & Poor’s Equity analyst.  S&P noted the Boeing first delivery of its new 787 in Nov.-Dec. 2008, compared with prior May 2008 expectation. S&P believes this delay reflects the complexity of the airplane, a tight aerospace parts market, and Boeing’s extensive use of suppliers for the 787.  While S&P now see more risk, it also sees Boeing’s commercial airplane backlog of over $207B as a major asset, particularly given recent problems at competitor Airbus. S&P has cut its 12-month price target price by $4.00 to a new $118.00 target based on the view that delivery delays will reduce near-term free cash flow.   Based upon the “Strong Buy” cut to “Buy” the ratings agency continues to view Boeing shares as attractive.

We noted earlier about how we had been looking at the maiden flight delays potentially bringing delays on deliveries.  This was somewhat trying to be factored into the markets.  But it caused some even wider problems for the stocks of its suppliers today.

Jon C. Ogg
October 10, 2007