Spirit AeroSystems Holdings (SPR) – Investment Analysts’ Weekly Ratings Changes
Spirit AeroSystems Holdings (NYSE: SPR) received a number of ratings updates from brokerages and research firms in the last week:
- Spirit AeroSystems Holdings was downgraded by analysts at Buckingham Research from a “buy” rating to a “neutral” rating.
- Spirit AeroSystems Holdings was downgraded by analysts at Credit Suisse from an “outperform” rating to a “neutral” rating. They now have a $17.50 price target on the stock, down previously from $30.00. They wrote, “SPR lost a third of its market cap today after announcing a massive $590M charge on a cluster of development programs, nearly all of it impairing future cash flow. We previously anticipated a charge of ~$35M to $120M (~$0.17-$0.58), which was greater than consensus, but primarily non-cash. Thus today’s much larger cash charge caught everyone by surprise and erased any recently-found confidence in SPR’s program assumptions. Note, this is the first time SPR has recognized a forward-looking forward loss, which means the cash impairment occurs on future deliveries while the EPS impact is immediate.”
- Spirit AeroSystems Holdings was downgraded by analysts at Sterne Agee from a “buy” rating to a “neutral” rating. They now have a $17.50 price target on the stock. They wrote, “Yesterday’s announced pretax charges totaling $590 million tied to six new programs have dramatically changed our investment thesis on SPR. While SPR has healthy content on key ramping aerospace programs, its ability to expand profit levels and generate positive cash over the next several quarters is limited stemming from the profitless ramp of new programs. We have reduced our estimates and outlook for positive cash flow.”
- Spirit AeroSystems Holdings had its price target lowered by analysts at RBC Capital from $27.00 to $19.00. They now have an “outperform” rating on the stock.
- Spirit AeroSystems Holdings had its price target lowered by analysts at Topeka Capital to $20.00. They now have a “buy” rating on the stock. They wrote, “Today Spirit held a conference call to discuss $590mm in program related charges, mostly in its Wing segment. While we had expected some charges on certain programs, the magnitude far exceeded even our worst case assumptions. As such, we are significantly reducing our price target to $20, as today’s announcement invalidated much of our thesis. However, we are maintaining our BUY rating as we believe its core programs will come back into focus and believe today’s sell-off has been overdone.”
- Spirit AeroSystems Holdings had its “in-line” rating reaffirmed by analysts at Imperial Capital. They now have a $20.00 price target on the stock, down previously from $28.00. They wrote, “· We are maintaining our In-Line rating, but we are lowering our one-year price target to $20, from $28, previously. SPR pre-announced a major $590mn 3Q12 charge associated with each of the major programs, the 787, G280, G650 and the BR725. The 3Q12 charge and 30% drop in the stock on a day when the S&P500 was up .3%, have led to a complete re-evaluation of the risk, cash flows, and future earnings power of the company.Rationale· We believed that SPR was gradually retiring the risk associated with its development programs. Our In-Line rating on the stock reflected a belief that SPR would face increased pricing pressure and that the commercial aerospace order cycle was maturing. The company clearly faces additional risk across each of its major development programs.· The announcement of the program charges has added significantly to the uncertainty surrounding future earnings and cash flows, in our view. We have lowered our 2013 and 2014 EPS estimates to $2.44 and $2.70, respectively based on additional execution concerns and future profitability. Ideally, the charge taken today represents a complete sweep of any future charges, but we would note that there is still risk associated with the supply chain and the cost assumptions.· Most importantly, however, the magnitude of the announcement has raised questions about the company’s ability to navigate these programs over their blocks, in our view. We believe the sell-off in the shares on 10/25/12 is overdone, but the timing of the announcement (how could such a large charge not have been better anticipated?) and the fact that there have been multiple charges on these programs underscores the risk associated with these development programs, and investors’ confidence in the outlook for the stock, in our view, will keep the stock pressured for at least 1-2 quarters.”
- Spirit AeroSystems Holdings had its price target lowered by analysts at JPMorgan Chase to $19.00.
Spirit AeroSystems Holdings, Inc. opened at 15.63 on Thursday. Spirit AeroSystems Holdings, Inc. has a 1-year low of $14.34 and a 1-year high of $26.00. The company has a market cap of $2.246 billion and a price-to-earnings ratio of 9.42.
Spirit AeroSystems Holdings, Inc. (Holdings) is an independent non- original equipment manufacturer (OEM) aircraft parts designers and manufacturers of commercial aerostructures.