This Morgan Stanley Analyst is Feeling Mighty Bullish on Boeing

03:46 03/04/2019

Morgan Stanley analyst Rajeev Lalwani has increased his price target on Boeing Co. BA  recently from $450 to $500, matching the highest price target on Wall Street.

According to Lalwai, he is confident in his bullish stance even though the stock has had a sharp run up this year already. Shares of Boeing have already ran up 30% year-to-date. The company has been the top gainer on the Dow Jones Industrial Average this year.

The analyst, who has an 'overweight' rating on the stock, believes that there will be more upward momentum in the company's shares and that there is 'a clear path to $500' for the stock.
In a note to investors, Lalwani cited his belief on several factors: the stable commercial aerospace backdrop, a healthy free cash flow yield and positive upcoming data points that include a potential China trade resolution, a 737 rate hike and Boeing's New Midsize Airplane launch. The analyst believes the launch of the airplan will be this summer at the Paris Air Show.

'To start, the market at large has priced-in a level of benefit associated with a trade resolution with China. In addition we note that the broader (Aerospace and Defense) sector, including Boeing, has observed limited P&L pressure from tariffs and tensions to date,' wrote the analyst.

According to Lalwani, there is also a chance for a boost in orders from this region.

It was just in January that Lalwani had raised his price target from $400 to $450. There’s plenty to like about the stock, said the analyst at the time.

During this upgrade, Lalwani had said that he believes U.S. spending will rise at a “reasonably healthy” low-single digit rate this year, supporting robust annual total returns around 8% to 10% for the group, which also enjoys “discounted valuations.”

In January's note, the analyst had said, 'we see foresee compounding growth coming from buybacks, production hikes, and margin improvement (15-20%), all from a management that has proven to be best-in-class.'

Charles Minervino, an analyst at Susquehanna, also initiated coverage on Boeing with a positive rating and a $388 price target not too long ago. 'We believe the commercial airplane market is still in an order upcycle, with customers needing to replace aging fleets while catering to growing travel demand,' Minervino wrote in a note.



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