The attorney general for Texas has opened an investigation into Spirit AeroSystems (NYSE:SPR), a key supplier for troubled aerospace giant Boeing (NYSE:BA). However, the surge in SPR’s stock price may not be dented anytime soon.
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Boeing’s Woes
Amid a series of unfortunate events, including door panel blowouts, tire incidents, and regulatory probes, Boeing has faced significant scrutiny regarding issues with parts supplied by Spirit for its planes. These challenges have led to a notable decline of nearly 26% in Boeing’s share price thus far this year.
Additionally, the announcement from Boeing CEO Dave Calhoun of his departure by year-end, following concerns related to incidents like a panel detachment from a 737 MAX 9 jet in January, has added to the turbulence surrounding the company.
Spirit’s Stock Price Surge
While Spirit too has come under fire, the trajectory of its share price is a different matter. The stock has soared by nearly 24% over the past month and is hovering at its highest levels in the past 52 weeks.
This rally is a result of a potential deal between Boeing and Spirit. Earlier this month, the two companies confirmed initial talks regarding an acquisition of Spirit by Boeing. Spirit is the largest parts supplier for BA. An acquisition would mean the return of Spirit to Boeing. It was formed in 2005 after Boeing carved out its Wichita and Oklahoma operations into a separate entity.
The Airbus Allure
Additionally, Spirit supplies parts to Airbus (OTC:EADSF) (FR:AIR), a competitor of Boeing. Recently, Airbus’ CFO noted that the French company could consider acquiring some of Spirit’s assets if Boeing ends up acquiring the company. Offloading some of Spirit’s assets to Airbus could mean an easier regulatory path for a Boeing-Spirit deal.
Is SPR Stock a Good Buy?
Needless to say, investor sentiment in Spirit is in high spirits amid the rising anticipation of a transaction. Overall, the Street has a Moderate Buy consensus rating on Spirit alongside an average SPR price target of $33.59.
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