The worst is behind Boeing (NYSE:BA) says Bank of America analysts after upgrading the stock’s rating to Buy from Neutral.
Shares in the aero and defense giant surged as much as 8.7% on Wednesday following the company’s second-quarter results. Boeing reported revenue of $19.75 billion, easily ahead of the Street at $18.49B.
Even more positively, the company said it generated $2.58B in adjusted free cash flow while analysts were expecting outflows of $73.6 million.
BofA especially highlighted robust demand for Boeing’s planes.
“We believe that demand is strong enough for Boeing to grow further, even if it were to only maintain its ~40% share of the narrowbody market. Additionally, we believe the 787 will remain the widebody of choice, holding onto the lion’s share of the widebody market vs. its competitors. We also expect there to be ample demand for 10 787s/month through the outyears,” the analysts said in a note.
Their new rating is accompanied by a $300 per share price target. Boeing shares are up a further 1% in pre-open Thursday.
“We are currently in the midst of the post-COVID commercial recovery with passenger demand emerging back to pre-pandemic levels. On the defense side, both domestic and international demand continues to accelerate, with investment outlays at new peak levels,” they added.
On the other hand, the analysts downgraded Raytheon (NYSE:RTX) to Neutral from Buy with a $95 per share price target.
The downgrade call comes “on account of amplified headwinds on the GTF program and a slower margin ramp at Raytheon. The most recent powder metal issue suggests that smoother waters at P&W likely remain further out on the horizon than previously expected. We also suspect investor patience with the hurdles facing RTX is running short, and that the narrative is now a “show me story”,” they said in a separate note.