The aerospace industry differs from other areas because it gives investors a clear look at future business through company backlogs, giving bulls confidence that the stock would recover, said Richard Safran of Buckingham Research Group.
“Aerospace investors are a little bit unique in one respect, and that is they have far more confidence in taking a two-year outlook than your average Joe,” said Safran, who has a neutral rating and a $365 target on the stock.
Once the Max is approved to fly, Boeing will see a surge in cash flow and could potentially buy back stock, Herbert said, but he still questions the long-term impact of the Max scandal and issues elsewhere in Boeing’s business.
“For me, the bigger issue is company specific as you come out of the sugar high on the Max and people realize, well, what do they need to do to their portfolio longer term and just how damaged is the Max as a brand,” Herbert said.
The delay could also impact orders from China, Safran said, where the Commercial Aircraft Corp of China (COMAC) is having certification issues with one of its planes.
“This year – what looks like over a year – grounding for the Max has now given the Chinese a bit of time to catch up,” Safran said.
The Max was grounded around the world following two fatal crashes, and Boeing’s target it for its return has been repeatedly pushed back as the company seeks regulatory approval. FAA chief Steve Dickson has said the re-certification process for the plane will not be done before the end of the year, and there is expected to be a gap between the time of approval and when the Max carries commercial passengers again.
Source Article from https://www.cnbc.com/2019/12/21/wall-street-analysts-stick-by-boeings-stock-even-as-737-max-saga-drags-on.html
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