Deutsche upgrades Spirit AeroSystems to Buy on 787 ‘price relief’

Deutsche Bank upgraded Spirit AeroSystems (SPR) to Buy from Hold with a price target of $30, up from $16, following the memorandum of understanding with Boeing (BA). The analyst updated forecasts for the higher 787 shipset pricing described in Spirit’s regulatory filing. The “price relief” drives an over $100M positive free cash flow revision to 2024 forecasts and over $200M positive revision to 2025 forecasts, the analyst tells investors in a research note. The firm believes the benefit of the higher price on 787 extends beyond the incremental 2024/2025 free cash flow and associated deleveraging, but also through the middle of 2027 and potentially beyond. Spirit’s higher 787 pricing is fixed through line unit 1605 which runs through mid-2027, which means that 2026 also should benefit from higher 787 price, contends Deutsche Bank.