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Spirit AeroSystems Reports 1Q Net Loss And Warns Of Slow Recovery; Shares Fall Over 5%

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Shares of Spirit AeroSystems (SPR) fell by as much as 5.43% on Wednesday after the company reported first-quarter results. Slowdowns in International air travel continue to pose the biggest headwind for the company's widebody programs.

The company reported a 16.34% drop in revenue to $900.8 million due to disruptions in international air traffic that affected widebody production rates. During the quarter, Spirit AeroSystems made 269 shipsets, down from 324 shipsets made in the same period last year.

Operating net loss narrowed to $125.9 million from $167.5 million a year ago, owing to the impact of lower restructuring costs. However, net loss increased to $171.6 million in 1Q 2021 vs. $163.0 million in 1Q 20202.

The loss per share widened to $1.65. vs $1.57 per share in 1Q 2020. Cash used in operations dropped to $170 million from $331 million.

Spirit AeroSystems intends to use the excess production capacity on its defense program opportunities, given the slowdown in the widebody programs. The company has also started carrying out engineering analysis for its 787 program. (See Spirit AeroSystems stock analysis on TipRanks).

"We are increasing 737 MAX production rates in line with Boeing's objective of 31 aircraft per month in 2022, and have started bringing back employees to support our factories," said CEO Tom Gentile.

Following the first-quarter results, Cowen analyst Cai Von Rumohr reiterated a Buy rating on Spirit AeroSystems with a $60 price target. This implies 39.37% upside potential to current levels.

"Messy Q4's EPS "miss" reflected an unexpected 787 rework charge; and Q1 cash outflow exceeded Street. However, normalized gross margin was encouraging; and CF guide suggests cash flow should turn positive in Q4. Thus, stock should have potential to rebound from its opening selloff," Rumohr wrote in a research note to investors.

Consensus among analysts on Wall Street is a Strong Buy based on 9 Buys and 3 Holds. The average analyst price target of $53.42 implies 24.09% upside potential to current levels.

SPR scores a 9 out of 10 on TipRanks' Smart Score rating tool, suggesting it is likely to outperform the overall market.

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