Published: Wednesday, October 21, 2009
Boeing stock takes hit on analyst's skepticism
Morgan Stanley downgrades Boeing, citing doubt about 787 schedule
EVERETT — Investment firm Morgan Stanley didn't wait for the Boeing Co.'s earnings report, due to be released today, to downgrade the aerospace giant's shares.
On Tuesday, the firm cut Boeing to “Underweight” from “Equal weight” on concerns over Boeing's delayed 787 jet program and its cash flow. Boeing will have the opportunity today to attempt to reassure Wall Street about the company's troubled 787 Dreamliner and its financial picture when Boeing issues its third-quarter earnings report.
Earlier this month, Boeing disclosed it would take a $1 billion charge in the third quarter because of problems with its 747-8 jumbo jet program. The company had announced in August a $2.5 billion third-quarter write-down related to its 787 program.
Boeing shares closed down 2.9 percent, or $1.56, to $51.89 on Tuesday.
“We have concerns that first flight (of the 787) will be pushed to 2010, and even more concerned first delivery could be six months delayed to spring 2011,” Morgan Stanley analyst Heidi Wood told Reuters.
Wood lowered her price target for Boeing to $43 from $50. The firm also noted concerns that Boeing's 787 might not meet the company's guarantees to customers because of weight and redesign issues. Boeing has acknowledged that its initial 787s are overweight but says it's working to trim weight on later production aircraft.
In June, Boeing called off the first flight of its 787 just weeks before the jet was expected to fly, then already nearly two years late. The company discovered a structural weakness in the area where the largely composite aircraft's wings and body join. In late August, Boeing said it was working on the fix and expected to fly the Dreamliner by year's end.
Morgan Stanley isn't the first to call Boeing's latest schedule into question. On Friday, industry site FlightBlogger suggested the 787's first flight schedule again was in trouble and that Boeing's initial fix did not work completely.
Boeing officials disputed the blog report last week.
“The design of the side-of-body solution is on track,” Boeing's Scott Fancher, 787 general manager, said in a statement Friday. “Installations of the fittings are proceeding well and we are pleased with the progress we are making on this important effort. We continue to be on track to fly the 787 by the end of the year.”
Analyst Scott Hamilton, with Leeham Co., doesn't expect Boeing to announce another delay to the Dreamliner, given Fancher's statement.
“We don't think Boeing will raise any red flags on this,” Hamilton noted on the Leeham Co. blog.
On Tuesday, the firm cut Boeing to “Underweight” from “Equal weight” on concerns over Boeing's delayed 787 jet program and its cash flow. Boeing will have the opportunity today to attempt to reassure Wall Street about the company's troubled 787 Dreamliner and its financial picture when Boeing issues its third-quarter earnings report.
Earlier this month, Boeing disclosed it would take a $1 billion charge in the third quarter because of problems with its 747-8 jumbo jet program. The company had announced in August a $2.5 billion third-quarter write-down related to its 787 program.
Boeing shares closed down 2.9 percent, or $1.56, to $51.89 on Tuesday.
“We have concerns that first flight (of the 787) will be pushed to 2010, and even more concerned first delivery could be six months delayed to spring 2011,” Morgan Stanley analyst Heidi Wood told Reuters.
Wood lowered her price target for Boeing to $43 from $50. The firm also noted concerns that Boeing's 787 might not meet the company's guarantees to customers because of weight and redesign issues. Boeing has acknowledged that its initial 787s are overweight but says it's working to trim weight on later production aircraft.
In June, Boeing called off the first flight of its 787 just weeks before the jet was expected to fly, then already nearly two years late. The company discovered a structural weakness in the area where the largely composite aircraft's wings and body join. In late August, Boeing said it was working on the fix and expected to fly the Dreamliner by year's end.
Morgan Stanley isn't the first to call Boeing's latest schedule into question. On Friday, industry site FlightBlogger suggested the 787's first flight schedule again was in trouble and that Boeing's initial fix did not work completely.
Boeing officials disputed the blog report last week.
“The design of the side-of-body solution is on track,” Boeing's Scott Fancher, 787 general manager, said in a statement Friday. “Installations of the fittings are proceeding well and we are pleased with the progress we are making on this important effort. We continue to be on track to fly the 787 by the end of the year.”
Analyst Scott Hamilton, with Leeham Co., doesn't expect Boeing to announce another delay to the Dreamliner, given Fancher's statement.
“We don't think Boeing will raise any red flags on this,” Hamilton noted on the Leeham Co. blog.
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