Boeing sets 787 tests, analysts encouraged but cautious

Wed Mar 13, 2013 5:06pm EDT
 
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By Alwyn Scott

NEW YORK (Reuters) - As Boeing prepared to start testing a redesigned battery system aimed at preventing fires on its flagship 787 Dreamliner, analysts upgraded the company's rating and lifted their targets for the stock price.

Some analysts said the high-tech plane, which was grounded worldwide in January, might be flying passengers again as early as May, after the Federal Aviation Administration on Tuesday approved Boeing's plan to certify the battery system.

Although the carbon-composite jet is only at the beginning of what could be a rigorous testing regimen, and still faces public hearings in April on the safety of its lithium-ion batteries, the FAA's approval of testing appeared to dispel clouds of uncertainty.

Investors have realized that "the 787 isn't the end of the world," said Ken Herbert, an analyst at Imperial Capital in San Francisco.

Instead, they are focusing on potential orders for Boeing and Airbus, including a $15 billion deal for Boeing 737s by Ryanair (RYA.I: Quote), that sources told Reuters the budget Irish carrier is close to signing.

"Investors are thinking there's more juice to this order cycle than people thought three months ago, and the 787 is not going to blow me up," he added. Herbert kept his "in-line" rating on the stock.

Among the upgrades, Stifel Nicolaus & Co raised its target on Boeing's stock price to $100 from $85. Peter Arment, analyst at Sterne Agee & Leach Inc, upped his target to $100 from $87.

Boeing shares rose 59 cents, or 0.7 percent, to close at $84.75 in New York Wednesday, after climbing 1.5 percent on Tuesday after the FAA news.   Continued...

 
The Boeing logo is seen on a Boeing 787 Dreamliner airplane in Long Beach, California March 14, 2012. REUTERS/Lucy Nicholson