Boeing sinks on assorted challenges, downgrade

posted: 36 DAYS 9 HOURS AGO

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NEW YORK -Boeing Co. fell Tuesday after an analyst downgraded shares on concerns the aerospace company's marquee aircraft will be delivered late and overweight, corporate cash flow will worsen and projected earnings will need trimming.

Morgan Stanley analyst Heidi Wood expressed concern the twin-engine 787 jetliner's first delivery could be delayed until Spring 2011.

Some of the delay stems from having to reinforce the so-called "Dreamliner," which is transforming "a once elegant composite design to one saddled with carbuncles of heavy titanium added throughout for strengthening."

If those "carbuncles" compromise the aircraft's weight too much, Boeing could be hit with compensatory damages paid to customers who ordered the 787 to keep their fuel costs down.

Cash flow also may be trimmed as production of 737 and 777 aircraft gets reduced beginning in the middle of next year and a global oversupply of aircraft limits new orders.

"One would rationally feel more comfortable about the feasibility of new aircraft production rates if the 'newish' parked planes were coming down faster," she said. "As yet, common barometers like parked planes and leasing rates suggest there is still a global oversupply."

As a result the analyst downgraded shares of the Chicago company to "Underweight" from "Equal-Weight," trimmed her share price target to $43 from $50 and cut her estimate for earnings per share to $3.85 from $4.50 for next year and to $3.55 from $4.85 for 2011.

Analysts polled by Thomson Reuters expect, on average, $4.49 in both years.

In afternoon trading, the stock fell $1.86, or 3.5 percent, to $51.59.

2009-10-20 13:20:55