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Spirit AeroSystems Reports Narrower-than-Feared Q2 Loss; Shares Fall

Spirit AeroSystems Holdings, Inc. (SPR), a global manufacturer of aerostructures for commercial and defense aircraft, reported a smaller-than-expected second-quarter loss. Revenue exceeded expectations thanks to higher shipset deliveries.

However, in response to the results, shares dropped 6.3% to close at $40.50 on August 4.

The company reported an adjusted loss of $0.31 per share, while analysts estimated a loss of $0.72 per share. In the year-ago period, Spirit AeroSystems reported an adjusted loss of $2.28 per share.

Reflecting another positive, revenue stood at $1 billion, up 55% year-over-year, and beat the Street’s estimate of $958.95 million. (See Spirit AeroSystems stock charts on TipRanks)

That being said, Spirit AeroSystems identified an additional issue in the forward section of the fuselage in the Boeing 787 shipset, which resulted in a forward loss of $46 million in the second quarter.

Cash used in operations was ($28) million, an improvement of $200 million compared to the prior-year quarter. For full year 2021, the company guided for cash used in operations to land in the range of ($50) -($150) million.

Tom Gentile, President and CEO of the company, said, “With continued improvement in domestic air traffic, we are seeing a strong recovery in narrowbody production rates as compared to a year ago, which is leading to improved cash flow performance.”

In response to the Q2 results, Cowen & Co. analyst Cai Rumohr reiterated a Buy rating on the stock with a price target of $70, implying 72.8% upside potential.

Rumohr said, “Q2’s adjusted EPS, adjusted gross margin and cash outflow were encouraging, and unchanged 2021 cash guide suggests a potential for positive cash in Q4. But it’s unclear if this includes Boeing’s 8/2 787 production adjustment expected to produce a Q3 adjustment. Hence, investors’ net reaction also is unclear.”

Overall, the stock has a Strong Buy consensus rating based on 6 Buys and 1 Hold. The average Spirit AeroSystems price target of $57.29 implies 41.5% upside potential to current levels. Shares have gained 94.4% over the past year.

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