CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:
Our 12-month target of $238, cut by $37, reflects a 27x multiple on our revised 2025 EPS estimate, adjusted from our prior 30x, on higher perceived risk. We cut our 2024 EPS view by $0.81 to $4.10 and 2025’s by $0.35 to $8.80. Shares are down 6% following news of a Boeing 737 MAX-9 aircraft, flown by Alaska Airlines (ALK 38 ***), that had a plug-type door blow out in-flight on Friday. The FAA has issued an emergency order, grounding all Max-9’s for further evaluation. On the one hand, BA has 4,526 of its nearly 6,000 commercial aircraft unit orders (about 75%) comprised of 737 MAX planes. On the other hand, the 737 MAX-9 with plug-type doors only affected 171 delivered units, and we think the lion’s share of the unfilled orders are tied to the 737 MAX-8 variety. Given that the MAX-9 has been in circulation for years, this is the first incident of its kind, and the plane in question is only two months old, we think this suggests a manufacturing defect, not a design flaw.