Spirit AeroSystems (NYSE:SPR), a leading manufacturer of aerostructures for commercial airplanes and defense platforms, is reducing its workforce. The company is laying off around 400-450 employees due to a slowdown in production and deliveries to Boeing (NYSE:BA).
It’s worth noting that Boeing is SPR’s largest customer and accounted for about 64% of its revenues in 2023. Boeing’s production and deliveries have slowed amid quality concerns, which has significantly impacted Spirit’s performance.
Boeing’s Troubles Weigh on Spirit AeroSystems
Boeing, which manufactures commercial airplanes, space systems, and defense products, is under pressure after an event on an Alaska Airlines (NYSE:ALK) flight. Notably, a part of the plane detached mid-air. Consequently, Boeing’s production and deliveries have slowed since then, and it is under scrutiny from the Federal Aviation Administration (FAA).
Spirit’s high dependency on Boeing is weighing on its financials. In Q1 of 2024, the company reported an adjusted loss of $3.93 per share, which was higher than the year-ago loss per share of $1.69. The company’s leadership said during the Q1 conference call that the quarter was negatively impacted by Boeing’s schedule changes and the investigation and quality audits after the Alaska Airlines incident.
While BA is SPR’s biggest customer, the company is also in discussion of being acquired by Boeing.
SPR’s Outlook Remains Uncertain
During the Q1 conference call, Spirit did not provide guidance due to the uncertainty surrounding the acquisition talks with Boeing. Moreover, the lack of clarity on the ongoing commercial negotiations with Airbus (DE:AIR) and the timing of 737 MAX deliveries and production also restrained management from offering an outlook.
Against this backdrop, let’s look at the Street’s forecast for SPR stock.
Is Spirit AeroSystems Stock a Good Buy?
Spirit AeroSystems stock is trading in the red on a year-to-date basis. Wall Street is cautiously optimistic about SPR stock. It has five Buys and five Holds for a Moderate Buy consensus rating.
Analysts’ average price target on SPR stock is $35.33, implying a 14% upside potential from current levels.
