Goldman downgrades Boeing as Dreamliner mishaps pile up

Share

Inside the Market's roundup of some of today's key analyst actions

Boeing Co.'s latest headaches involving the 787 Dreamliner have cost it a coveted rating from Goldman Sachs.

The U.S. investment bank removed the airplane manufacturer from its "conviction buy" list - a small handful of its most favourite stocks. It now rates Boeing simply as a "buy," and it also cut its price target to $90 (U.S.) from $98.

Japan's two leading airlines grounded their fleets of Boeing 787s earlier today after yet another emergency landing of one of the revolutionary jets that recently started flying. This time, instruments aboard an All Nippon Airways Co. flight triggered emergency warnings to the pilots, possibly involving smoke. A number of other recent mishaps have involved fuel leaks, a battery fire, wiring programs, and a brake computer glitch.

"The concentration and possible overlap of cause within these events heightens the risk of a potentially more meaningful required change to the aircraft and therefore a possible delay in the pace of the production ramp," Goldman said in a note.

But Goldman noted it is normal for new aircraft to experience early challenges and it's possible that the recent Dreamliner problems fall into the "teething category."

Boeing shares are under pressure today, down 3.8 per cent at $73.99 (U.S.) in mid-afternoon trading. That's still well below the average price target on the Street of $87.57, according to Bloomberg. And, like Goldman, most analysts still recommend the stock, with 23 rating it as a buy, five as a hold and only one as a sell.

==============

Boardwalk Real Estate Investment Trust will benefit from stronger-than-expected demand for rental housing in Alberta, Canaccord Genuity analyst Mark Rothschild said.

"Although it is still early, it is particularly encouraging to see solid fundamentals in the winter months. Asking rental rates continued to move higher in Boardwalk's most important markets," he wrote in a research note. "The use of incentives within Boardwalk's apartment portfolio remains quite limited, which is particularly encouraging through the winter months, when rental activity is typically slower. The lack of concessions should leave the REIT well-positioned to continue to increase rental rates in the months ahead."

Upside: Mr. Rothschild raised his price target to $69 from $66 and rates the stock "hold."

==============

Rocky Mountain Dealerships Inc. is likely to see stronger margins over the next two years, said CIBC World Markets analyst Jacob Bout.

"The outlook for new equipment sales remains robust, particularly for larger-ticket items such as high-horsepower combines," he said. He expects "organic growth" of around 7 to 8 per cent annually, but a higher proportion of parts and services sales should widen margins.

Upside: Mr. Bout raised his rating on the stock to "sector outperform" from "sector perform" and his target price to $16 from $13.

==============

Lundin Mining Corp. offers investors low-risk, high-quality operating mines and a disciplined approach to acquisitions, said Desjardins Securities analyst Jackie Przybylowski.

"The company is unique among the larger cap base metals producers in our coverage universe in that it operates mature mines and has minimal exposure to capital-intensive growth projects in the near term. We believe Lundin is attractive to investors concerned about capital cost creep and missed production milestones."

Upside: Ms. Przybylowski rates Lundin "buy" and has a one-year price target of $6, citing its "relatively low risk, owing to its strong balance sheet, largely mature operations, minimal exposure to large-scale growth projects and potential for long-term growth through accretive acquisitions."

==============

CIBC World Markets analyst Jacob Bout continues to believe Mosaic Co. is a takeover target, with BHP Billiton Ltd. the most likely suitor.

He notes that Mosaic has $2.4-billion net cash on its balance sheet and the sinking of the shaft at the K3 mine in Esterhazy, Saskatchewan, will go a long way to reduce flooding risks elsewhere within the huge potash operation there.

Upside: Mr. Bout raised his price target to $70 (U.S.) from $64 and reiterated a "sector outperformer" rating.

For more analyst actions, breaking investing news and analysis, follow Darcy Keith on Twitter at @eyeonequities