Benzinga - by Shanthi Rexaline, Benzinga Editor.
Boeing Co. (NYSE:BA) shares fell on Wednesday following the airplane manufacturers’ quarterly results, and a bullish analyst said the recovery route from the current predicament could be a long-drawn one.
Twin Focus Areas: There are two things that are key to the Boeing story now – a potential buyout of supplier Spirit AeroSystems Holdings, Inc. (NYSE:SPR) and roping in a new CEO, said Langenberg & Co. founder Brian Langenberg said in an interview with CNBC.
Boeing's clean up will be a multi-year affair, says Brian Langenberg. he has a Buy on the stock with a $275 PT but a lot hinges on the new CEO.@willkoulouris $BA pic.twitter.com/xhMzua0QvU— CNBC's Street Signs (@StreetSignsCNBC) April 25, 2024
With on-and-off rumors regarding a potential Spirit AeroSystems buy since last year, it has become a “have-to-think” by the legacy existing management, the analyst said.
Langenberg said he sees a couple of silver linings. If Boeing opts to buy Spirit AeroSystems now, it wouldn’t be buying at peak profitability and therefore, there is upside from that, he said. Also, the analyst said the company may not lose out on Spirit AeroSystems’ Airbus business. “Aviation is a industry where there is a lot of collaboration, even among rivals, and they wouldn’t necessarily lose the Airbus business, because Airbus maybe doesn’t want to, well, bend metals,” he said.
Long-term Fix: Langenberg said the responsibility of fixing Boeing on a longer-term basis lies with the CEO, who will have to make the most important decision of picking the right airplane programs, both on the commercial and defense side.
“But then the other part is, it has to be someone who is committed and focused to getting Boeing into being an engineering-driven organization again, and that means less reported profits near term, but save the company and rebuild its health long term,” he said.
“So it’s the near term stabilizing the production, and the long term fixing the company.”
Value Trap? Langenberg also weighed in on whether it is prudent to buy the stock and play the long game until things improve or whether the stock has become a value trap. The analyst said he has a Buy rating on Boeing, although he said he missed a downgrade opportunity when the stock was at $250.
“I didn’t expect things to start falling apart in midair,” the analyst said.
“So, you know, anywhere at this price, $164, $175, anywhere around here, okay,” he said, adding “if they get it right, it’s an incredible opportunity.”
If Boeing doesn’t get it right, down the road, it would prove to be a value trap, he said.
“Anybody who’s recommending the stock, including myself, isn’t making an implicit judgment that this can’t be fixed. And I think it can be fixed, but that comes down to, you know, who’s the next leader,” Langenberg said.
In premarket trading on Thursday, the stock fell 0.44% to $163.60, according to Benzinga Pro data.
Read Next: Boeing Isn’t Junk Status — Yet: Moody’s Outlook On Aircraft Maker Goes Negative
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Latest Ratings for BA
| Mar 2022 | Cowen & Co. | Maintains | Outperform | |
| Jan 2022 | Jefferies | Maintains | Buy | |
| Jan 2022 | Morgan Stanley | Maintains | Overweight |
View the Latest Analyst Ratings
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