Boeing Target Raised as Morgan Stanley Sees Path to $500 a Share

(Bloomberg) -- Boeing Co. shares have a “clear path” to $500 given broadly higher market multiples, along with a potential order boost from a resolution in the China trade situation, Morgan Stanley analyst Rajeev Lalwani wrote in a note to clients.

“The combination of a healthy free cash flow yield, a stable commercial aerospace backdrop, and positive upcoming data points” support continued upward momentum in Boeing shares, the analyst added, and raised his price target on the stock to $500 from $450. He maintained the overweight rating.

At $505, First Shanghai Securities is the only analyst with a price target over $500 on Boeing, and Melius Research also has a $500 target, according to Bloomberg data.

Boeing shares have gained 35 percent this year, making it the top gainer on the Dow Jones Industrial Average.

• China trade resolution could boost orders with an opportunity of over 2,000 aircraft, Lalwani wrote
• However, he added that the market at large has priced-in a level of benefit associated with a trade resolution between the U.S. and China
• “There’s way too much angst around the NMA (new midsize airplane), in our view, and that’s the opportunity”
• The NMA launch, that may occur in June 2019 at the Paris Air Show, could end up being an opportunity for Boeing to address any overhang in shares and highlight its increased focus on financial discipline, a positive for the narrative, the analyst said
• Boeing has 22 buys, 6 holds, 1 sell; avg PT $445: Bloomberg data

To contact the reporter on this story: Esha Dey in New York at edey@bloomberg.net

To contact the editors responsible for this story: Courtney Dentch at cdentch1@bloomberg.net, Sebastian Silva

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