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They highlighted “a litany of quality control issues across the aerospace industry” which are likely to weigh on the company’s delivery schedule “to some degree.”
“We widen our expected loss per share in ’23 by $2.39 to -$3.29 and cut our ’24 EPS estimate by $0.63 to $5.39. BA guided for deliveries of its family of 737 planes at 50 per month by the 2025-2026 time frame, which still affords time to resolve issues, but we note that (1) current guidance remains below early ’19 guidance levels, despite more runway to get there; and (2) BA shares already fetch a higher multiple today than in early ’19,” they wrote in a client note.
Despite the rating cut, CFRA remains bullish on the long-term outlook for aircraft demand, and it estimates that approximately 76% of the global fleet from 2022 will require replacement by 2042.
“[This is] a strong opportunity for BA,” the analysts concluded.
