It was just a few days ago that we heard that one of Boeing’s (BA) key suppliers, Spirit AeroSystems (SPR), was questioning whether or not it could endure until the merger. But a new report from Reuters reveals that the aerospace may be ready to step in and keep Spirit afloat until the merger goes through. Investors were not happy, and BA shares slipped just over 2% in Monday afternoon’s trading.
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Spirit took a substantial loss in the last couple of months when its primary customer, Boeing, shut down most of its operations as the result of a strike that started back in September. This was just the latest problem for Spirit, which had been running at a loss for the last four years. And with early projections saying that it will burn between $450 million and $500 million for the last three months of 2024, and the first half of 2025, it is clear something must be done.
Thus, Spirit is looking to raise cash. It has already turned to customer advances and has drawn down a bridge loan for $350 million. It may even be planning to sell FMI, its defense composites supplier, according to the Reuters report.
Breaking Boeing?
We have also seen Boeing working to divest itself of some of its operations. Its space operations, in particular, have come on the block, especially after the still-ongoing debacle that is Starliner. A report from Barron’s suggests that the best way to get Boeing back on track may be to break it up.
Jim Osman, founder of The Edge, detailed that “…breaking apart Boeing’s divisions…could be a calculated action to release latent value and give stockholders a clearer road toward long-term success.” With several Boeing divisions recently revealed to be less than profitable—including its defense and commercial airplane segments—its services sector is still producing wins for the company.
Thus, selling off some of these lagging operations could be a step forward for Boeing, but it may also negatively impact its growth potential.
Is Boeing a Good Stock to Buy Right Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on BA stock based on 15 Buys, six Holds, and two Sells assigned in the past three months, as indicated by the graphic below. After a 27.28% loss in its share price over the past year, the average BA price target of $193.62 per share implies 30.64% upside potential.
