Boeing (BA) Stock Downgraded by Wells Fargo

Shares of the Boeing Company (BA) were trading up +1.14 or +0.82 percent to $140.72 per share in Monday’s premarket after the company was downgraded by Wells Fargo (WFC) early Friday. Boeing Company stock closed at $139.58 per share, down -5.98 or -4.11 percent in Friday’s regular trading session.

Chicago, Illinois based Boeing Company is an American multinational aerospace corporation involved in the design and manufacture of fixed wing aircraft, rockets, satellites and rotorcraft.
The company’s main components include Boeing Military Aircraft, Commercial Airplanes, Network & Space Systems and Global Services & Support. Boeing is one of the largest aircraft manufacturers in the world and the second largest aerospace and defense contractor.

A number of significant stories on The Boeing Co. surfaced last week ending with the stock closing more than four percent lower on Friday after being downgraded by analyst Sam Pearlstein at Wells Fargo. Pearlstein lowered the stock’s rating from Outperform to Market Perform and cutting Boeing stock’s price target from a range of $163 to $166 to $154 to $158 per share.

Pearlstein noted that, “The Company’s initial guidance on January 27 is likely to miss consensus expectations, offsetting the favorable cash-generation story. Lower price escalation for commercial aircraft is an under-appreciated headwind...and economic growth and the general aerospace cycle will make it difficult for Boeing shares to Outperform.”

Also pressuring Boeing’s stock price last week was Thursday’s announcement by Delta Air Lines (DAL) Chief Executive Richard Anderson, saying he had signed a letter of intent to buy a used Boeing 777 for $7.7 million. Anderson, in a tweet said that, “I was wrong when I said used 777s were on market for $10 million, it was actually $7.7 million. We just signed a letter of intent to buy one.”

The announcement sent Boeing stock down -1.2 percent immediately after its release. The stock had been up over +1.0 percent after news that China Southern Airlines had placed an order for 110 aircraft worth approximately $10 billion earlier that day.

On Wednesday, Delta Air Lines announced it had agreed with Boeing on the purchase of 40 aircraft, including 20 new 737-900ER jets and 20 used Embraer (ERJ) E190 jets that Boeing was receiving from Air Canada. The deal has taken approximately six months after a previous agreement fell through when Delta’s pilots rejected the deal in early June.

Boeing began the week announcing an increase to its stock repurchase authorization and a 20 percent increase of the company’s dividend, which marks the fifth consecutive year the company has raised its dividend. The stock repurchase authorization is for a total of $14 billion in stock buybacks from $12 billion last December.

Boeing stock was trading over $149 per share on Wednesday and subsequently sold off on Thursday and Friday due to the negative news reports. According to Canaccord analysts, investor sentiment on the stock is “as polarized as we have ever seen.”

Other News About BA

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Company takes the next step in its protest of USAF’s decision on awarding the Long Range Strike Bomber to Northrop Grumman.


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Published on Dec 21, 2015
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2016. Content published with author's permission.

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