The FAA's ungrounding of the 737 Max and recent positive coronavirus vaccine news bode well for Spirit AeroSystems Holdings, Inc. (NYSE: SPR), according to Canaccord Genuity.
The Spirit AeroSystems Analyst: Ken Herbert upgraded Spirit AeroSystems from Hold to Buy and raised the price target from $21 to $40.
The Spirit AeroSystems Thesis: Although the stock has recovered substantially from its recent lows, it is still down around 65% year-to-date, underperforming aerospace peers, Herbert said in the upgrade note.
“While the recovery on the MAX production will be slow (we see a further shift to the right), and the supply chain will be dependent on the pace of Boeing’s (NYSE: BA) MAX deliveries, we believe the MAX ungrounding, coupled with positive vaccine news, will continue to positively shift the narrative on SPR more completely to the pace of recovery and upside,” the analyst said.
The aggressive initiatives taken by Spirit AeroSystems on its cost structure could “add to incremental upside in 2021-2023 as volumes gradually recover,” he said.
Canaccord expects the company to continue to benefit from “an increased focus on value stocks and the broader aerospace recovery.”
SPR Price Action: Shares of Spirit AeroSystems were trading down slightly at $32.56 at last check Friday.
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