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The Case for Boeing Shares to Take Off

Wednesday, 9 Jan 2013 | 3:55 PM ET
Still Bullish on Boeing: Analyst
Carter Copeland, Barclays Capital analyst explains why he maintains an "overweight" rating on Boeing, despite recent technical glitches with its Dreamliner 787.

Despite three mishaps this week for Boeing's long-awaited 787 Dreamliner, two analysts still have "buy" ratings on its stock and one said the recent problems have not changed the company's long-term fundamentals yet.

Carter Copeland, an analyst at Barclays Capital, said he thinks the plane is seeing the sort of "teething problems" that are normal for new planes. So far, there haven't been any signs that Boeing's production would be slowed down or interrupted to address concerns about the new plane, Copeland added.

"The central bull thesis for Boeing shares is about the large amount of cash that the company's going to generate over the course of the next three, four years with production rates as high as they are and with the 787 ramping up to very high levels to meet customer demand," he said.


This week has been an eventful one for Boeing. On Wednesday, brake problems forced Japan's All Nippon Airways to cancel a 787 flight. The mishap followed a fuel leak on Tuesday that caused Japan Airlines to cancel take-off at Boston's Logan International Airport, a day after an electrical fire on another 787 after a JAL flight to Boston from Tokyo.

If Boeing's cash flow were to be called into question, that would weigh against the bull case for the company, but Copeland told CNBC's "Squawk on the Street" that there is not data to suggest that this is going to happen. Trying to connect the fire at Logan to other 787 events is "pure speculation" at this point, he added.

"So I think we've got to wait and see," he said. "We need a little bit more data, but it's not calling into question the long-term fundamentals upon which our recommendations are based."

Copeland has a $95 price target and a "buy" rating on Boeing's shares.

United Airlines Boeing 787 Dreamliner
Darren Booth | CNBC
United Airlines Boeing 787 Dreamliner

Rick Whittington, director of research at Drexel Hamilton, also maintains a "buy" recommendation on the company's stock in addition to a $90 price target, a figure he says "could just be a starting point."

Whittington told CNBC that Boeing currently has a "huge backlog" and forecast that "earnings are going to go higher these next several years" as the company ramps up production.

"Despite these lamentable in-flight or on-the-ground issues, nobody's cancelling orders and the airplanes are going back into very ready service," Whittington said. "I think if there was a safety problem, the National Transportation Safety Board would have acted by now and secondly the airlines would ground the planes."

—By CNBC.com's Katie Little; Follow on Twitter @Katie_Little

Additional News: Boeing Defends 787

Additional Views: Bad Few Days for Boeing

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Disclosures:

Boeing during the past 12 months has been a non-investment banking client of Barclays.

An affiliate of Drexel Hamilton received compensation from the subject company for products or services other than investment banking services during the past 12 months. Boeing is, or during the past 12 months was, a client of Drexel Hamilton, which provided non-investment banking, securities-related services to, and received compensation from, Boeing for such services.

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