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BB&T Capital Markets analyst Carter Leake on how the Dreamliner’s battery issues will impact the outlook for Boeing.
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So what does all of this mean for Boeing shareholders since the first fire last month the Boston shares are down nearly 2% -- An analyst at BBC capital markets actually the first analysts to downgrade Boeing shares day after.
That's 787 fire Carter we just heard from the NTSB.
Which said it has a long road ahead on the investigation not what -- want to hear -- Corrected it it was interesting the market's initial reaction it was a two part briefing the first part talked about.
-- the battery fire the sources in the causes and in the second talked about the certification process and rich assessment I agree with which was.
You know the market initially was excited that this could be a short circuit which you know the quick conclusion would be that that would be some manufacturing defects which would imply a quick fix.
But the bigger story is the all encompassing investigation.
And and the NTSB was very clear that they are looking you know very closely.
And the very premise that the certification of the system and that's what has us most concerned.
Right in your latest note on Boeing -- you suggest that investors are just looking for level of confidence.
From Boeing from the NTSB.
And I industries that -- -- stand on that in terms of how your you know gauging your future opinion on Boeing shares.
Well -- -- -- that the the earnings call went quite well on the earnings front but I I felt that management not miss an opportunity to at least put.
Some parameters on -- what what the possible outcomes could be I don't feel that.
That those questions you know will win in -- way you know impacted gag order on the investigation and so it really is incumbent upon Boeing.
-- to give us profitability of outcome.
It's so the stock is held up really since all of these issues down just about 2% or so in the last month.
Shares are up fifty cents today what's your outlook.
My yeah my outlook kid -- the -- to be -- capital markets is just one of conservatism it's it it goes like this it says if you asked me to contrive the worst possible scenario for an OEM this would be yet.
You -- doubling production at the same time that you have to investigative bodies.
Looking at not only you know a fire incident but -- entire certification process and against that backdrop.
We we find it difficult to want to leap into the stock right here.
OK so hold then because I know the company can look at the balance -- got a fair amount of debt there as well.
So stay right here you wouldn't necessarily sell it -- We actually have an underweight rating on the stock bomb.
You know it is the issue is that you know the the timing of this your correct is that the invented the report is just an interim report in thirty days.
And we think the probability that this accelerates more to a six month scenario.
Where cast -- does get impacted production may get impacted and for that reason we we think that there is more downside than upside right here.
You know getting back to this question -- the certification process the Wall Street Journal wrote extensively.
On the FAA back in 2007.
Giving special conditions for approval of this particular.
Battery if the investigation really starts to focus on that angle of this will change your outlook.
-- that that that is -- I think that that's the path that we're heading down and in the difficult thing about certification is it's a very very slow process if we change batteries or if we change really -- -- on the current certified system.
You have that you you have really have no idea on when it can get recertified.
But you know I would start off at around six months and those are those are big numbers it's hard to have big impacts are right very good -- Ali thanks so much for your your insight.
Thank you so.
