On Wednesday, Spirit AeroSystems (NYSE:SPR) stock maintained its Outperform rating and a price target of $35.00, as confirmed by Bernstein SocGen Group.
The aerospace company's first-quarter performance fell short of market expectations, with an adjusted earnings per share (EPS) of -$3.93 compared to the consensus estimate of -$0.54.
Spirit AeroSystems' financial results were significantly impacted by charges totaling $495 million. The majority of these charges, approximately $450 million, were associated with the A350 and A220 programs.
The unexpected costs arose after the termination of anticipated deals related to the Boeing (NYSE:BA) acquisition, which affected the A350 and A220 programs.
The company also faced additional charges due to Boeing's decision to reduce production rates. These rate cuts led to charges on both the 737 and 787 programs.
Furthermore, a cash shortfall of $350 million was reported, stemming from a transition to completing fuselage reworks in Wichita. This change is part of a new quality process being implemented by Spirit AeroSystems.
According to the analyst, the challenges faced by Spirit AeroSystems in the first quarter were largely beyond the company's control.
The issues were primarily a result of external factors, including the changes in Boeing's operational strategies and the consequent effects on Spirit's programs.
Despite the setbacks in the first quarter, the rating and price target for Spirit AeroSystems remain unchanged. The company's stock continues to be viewed favorably by Bernstein SocGen Group, with the expectation that it will reach the set price target of $35.00.
InvestingPro Insights
As Spirit AeroSystems (NYSE:SPR) navigates through its current financial challenges, insights from InvestingPro provide a deeper understanding of the company's market position. With a market capitalization of $3.64 billion and a negative P/E ratio reflecting its lack of profitability over the last twelve months as of Q1 2024, investors are looking at a company that is not only unprofitable but also has a significant debt burden and is quickly burning through cash.
InvestingPro Tips highlight several concerns, such as the company's weak gross profit margins and a valuation that implies a poor free cash flow yield. Additionally, while the company's liquid assets exceed its short-term obligations, analysts do not anticipate Spirit AeroSystems will be profitable this year. It's also worth noting that the stock does not pay a dividend to shareholders, which may be a consideration for income-focused investors.
For those seeking more comprehensive analysis, InvestingPro offers additional tips on Spirit AeroSystems' financial health and future outlook. With the use of coupon code PRONEWS24, readers can avail themselves of an additional 10% off a yearly or biyearly Pro and Pro+ subscription to access these insights. Currently, there are 7 more InvestingPro Tips available that could help investors make more informed decisions regarding Spirit AeroSystems.
Despite the current headwinds, Bernstein SocGen Group maintains an Outperform rating with a price target of $35.00, suggesting a belief in the company's potential to overcome these obstacles. The next earnings date set for July 31, 2024, will be a key moment for investors to watch, as it may provide further clarity on the company's trajectory.
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