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Fly News Breaks for September 9, 2019
Sep 9, 2019 | 08:32 EDT
As previously reported, Buckingham analyst Daniel McKenzie downgraded Spirit Airlines (SAVE) to Neutral from Buy and lowered his price target on the shares to $41 from $69, citing his view that the revenue weakness seen in Q3 likely worsens this winter and into 2020. His view that revenue weakening could worsen later this winter is based on the "ungrounding" of Boeing's (BA) MAX, the fact that competitive capacity will double across Spirit's network and JetBlue's (JBLU) rollout of basic economy and does not even factor in an economic downturn or a potential IPO of Frontier, McKenzie tells investors.
News For SAVE;JBLU;BA From the Last 2 Days
Oct 21, 2019 | 10:36 EDT
Catch up on today's top five analyst downgrades with this list compiled by The Fly: 1. Boeing (BA) downgraded to Neutral from Outperform at Credit Suisse and to Neutral from Buy at UBS. 2. Spirit AeroSystems (SPR) downgraded to Neutral from Buy at UBS with analyst Myles Walton citing Spirit's "outsized exposure" to Boeing's (BA) 737 Max program for the downgrade. 3. Gildan Activewear (GIL) downgraded to Hold from Buy at Edward Jones. 4. IBM (IBM) downgraded to Neutral from Buy at UBS with analyst Munjal Shah saying he believes it will be difficult for the company to achieve sustainable mid-single digit revenue growth. 5. Alcoa (AA) downgraded to Hold from Buy at Gabelli with analyst Justin Bergner saying Acloa's 12% two day post-earnings rally reflected better than expected proceeds from non-core asset sales and a view that estimates have bottomed. This list is just a portion of The Fly's full analyst coverage. To see The Fly's full Street Research coverage, click here.
Oct 21, 2019 | 10:18 EDT
Stifel analyst Joseph DeNardi downgraded Southwest Airlines (LUV) to Hold from Buy with a price target of $60, down from $75. The stock in morning trading is up 7c to $53.55. Southwest is an all Boeing (BA) 737 airline, which makes its business model dependent on 737s, DeNardi tells investors in a research note. Southwest's decision to remove the 737 MAX from its schedule through early February, a "deteriorating" relationship between the Federal Aviation Administration and Boeing, and reports that Boeing may be looking at a 737 MAX rate cut indicate that Southwest "may be nearing a tipping point" where the duration of the MAX grounding pushes it to consider more significant and strategic solutions, including acquisitions, DeNardi contends. The analyst believes an acquisition by Southwest motivated by a desire to diversify away from the MAX "creates significant risks" in the near term for the company. DeNardi today also upgraded shares of JetBlue Airways (JBLU) to Buy from Hold.
Oct 21, 2019 | 06:39 EDT
Credit Suisse analyst Robert Spingarn downgraded Boeing to Neutral from Outperform with a price target of $323, down from $416. UBS this morning also downgraded Boeing, whose stock closed Friday down 7%, or $25.06, to $344.00. Reuters on Friday reported on messages between two Boeing test pilots in 2016, which shows that the company seems to have known about the 737 Max Maneuvering Characteristics Augmentation System's erroneous tendencies prior to certification, Spingarn tells investors in a research note. "We can no longer defend the shares in light of the latest discoveries, discoveries which significantly increase the risk profile for investors," says the analyst. Spingarn believes the pathway to return to service for 737 Max "could be obstructed as the messages may shatter the fragile trust" between regulators and Boeing. The analyst, while admitting he can't opine on legal issues, also points out that the company is under criminal and civil investigations.
Oct 21, 2019 | 06:25 EDT
Boeing's board met on Sunday in San Antonio Texas amid intensifying scrutiny over its banned 737 MAX jet and the financial burden caused by the ban, Reuters' Eric M. Johnson and Tim Hepher report. According to several industry source,s there is speculation inside the company of "significant" job cuts as Boeing continues to drain cash, adding that Boeing may have to lower production rates of single-aisles if regulators further delay the MAX's return to service. Reference Link
Oct 20, 2019 | 19:31 EDT
Catch up on the weekend's top five stories with this list compiled by The Fly: 1. Boeing (BA) said that it regrets and understands concerns raised by the release of a former Boeing test pilot's internal instant messages noting erratic software behavior two years before deadly crashes of its 737 MAX jet, Reuters' Eric Johnson and Bhargav Acharya reported. The planemaker also said it was investigating the "circumstances of this exchange" and regretted the difficulties that the release of messages presented for the U.S. Federal Aviation Administration, the authors noted. 2. Facebook (FB), facing growing skepticism about its digital currency project Libra, said the initiative could use cryptocurrencies based on national currencies such as the dollar, instead of the synthetic one it initially proposed, Reuters's Andrea Shalal reported. David Marcus, who heads the Libra project for Facebook, told a banking seminar the group's main goal remained to create a more efficient payments system, but it was open to looking at alternative approaches for the currency token it would use, the author noted. 3. If cord-cutting accelerates among traditional cable customers, companies like Disney (DIS), WarnerMedia (T) and NBC (CMCSA) will need to win streamers quickly, and if TV viewers stick with their cable bundles for longer than expected, companies could end up having overspent to go over the top, Jack Hough wrote in this week's edition of Barron's. Regardless, there is good money to be made in media stocks in coming years, not just despite the turmoil, but because of it, the author notes. Comcast stacks up better than investors might expect, in part because, for it, cord-cutting is a misnomer, Hough contended, adding that in its markets, Comcast's broadband service is the top means of delivering Netflix (NFLX) and Amazon (AMZN) to homes. 4. "Maleficent: Mistress of Evil" earned $36M from 3,790 theaters in its debut weekend, well behind expectations and over 45% less than the launch of "Maleficent" five years ago. Overseas, the sequel bowed to $117M from 56 markets for an early worldwide total of $153M. Audiences gave the movie an A, while Rotten Tomatoes rating stands at 41%. 5. ConocoPhillips (COP) and GVC Holdings (GMVHF) saw positive mentions in this week's edition of Barron's.