DJ Boeing and Airbus Stock Is Downgraded. Don't Count on a Quick Vaccine, Analyst Says. -- Barrons.com
By Al Root
Bernstein analyst Douglas Harned downgraded Boeing and Airbus, the only two makers of large jets, because a solution to the Covid-19 pandemic isn't coming soon enough.
"We have seen potential for a recovery from Covid-19 as dependent on a medical solution to bring global travel levels back to normal," wrote Harned in a Friday research report. "Based on our assessment of the traffic outlook, combined with analyses by Bernstein's health care team, we believe the solution is farther out."
His ratings on both stocks went from the equivalent of Buy to Hold. His Boeing (ticker: BA) stock-price target went from $180 to $165, while he cut his call on Airbus (AIR.France) from about EUR73 ($80) to EUR69.
It's a downbeat take. Aerospace investors had been feeling more optimistic lately. Boeing shares, for instance, are up more than 20% over the past month.
More people on planes is one reason for increased optimism. Air travel in the U.S. over the past seven days is down about 80% year over year. A month ago, the comparable decline was about 90%. It isn't a huge improvement, but Wall Street likes to focus on the rate of change.
A viable coronavirus vaccine, potentially bringing back air travel faster than currently projected, has always been seen as a big deal for airlines and jet manufacturers. Yet Harned took a cautious stand on that.
"While progress continues on vaccines, we do not expect this to be the complete solution," wrote the analyst. "There are many vaccines in development and we are confident that successful ones will emerge in 2021. But, it is not yet known what the efficacy of the early vaccines will be or how broad a portion of the global flying population will be vaccinated over time."
In the absence of a safe and effective vaccine developed soon, Harned predicts air travel would return to 2019 levels by 2023. That means airlines will require fewer deliveries from jet makers to meet reduced demand.
As the number of reported Covid-19 infections in the U.S. has increased in recent days, some of the juice has come out of the commercial aerospace sector. Boeing stock is down about 9% over the past week. Airline shares have fallen about 10%. The Dow Jones Industrial Average and S&P 500 are off by 1.3% and 1% over the same span, respectively.
Even though stocks have bounced back from their March lows, commercial aerospace has been devastated by the pandemic. Boeing and Airbus stocks remain down about 46% and 57% year to date, respectively. The aerospace supplier stocks Barron's tracks are down about 40% on average. And airline shares are down roughly 48%. The declines have wiped out hundreds of billions of market value.
The battle airlines are waging with the virus is far from over. In fact, Italy is banning carry-on luggage, in a move reported on by the Italian newspaper Corriere Della Sera Thursday. The Italian National Civil Aviation Authority will ban the use of overhead bins for health reasons starting Friday.
If other countries do the same, it would be another potential headwind for airline stocks. Checking bags adds time and irritation for travelers, and U.S. airlines also generate billions of dollars from checked-baggage fees. A requirement to check bags might make it tougher to collect that revenue.
Italy was hit hard by the pandemic in March and April. More recently, the number of new cases diagnosed daily in Italy is in the hundreds, down from thousands. About 240,000 Italian cases have been reported and more than 34,000 people have died in the country. Globally, reported cases are approaching 10 million and deaths are nearing 500,000.
The U.S. reported more than 39,000 new infections Thursday, according to the Covid Tracking Project. That's close to a new daily high. Testing is up, but positive results have averaged 6.1% of the total over the past week, up from about 5.4% a month ago.
Write to Al Root at email@example.com
(END) Dow Jones Newswires
June 26, 2020 09:49 ET (13:49 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
随着最近几天美国报告的新冠肺炎感染人数的增加，一些果汁已经从商业航空领域流出。波音股价在过去一周下跌约9%。航空公司的股价已经下跌了约10%。道琼斯工业股票平均价格指数(Dow Jones Industrial Average)和标准普尔500指数(S&P500)同期分别下跌1.3%和1%。
航空公司与该病毒的战斗远未结束。事实上，意大利“晚邮报”(Corriere Della Sera)周四报道称，意大利正在禁止随身携带行李。意大利国家民航局将从周五开始，出于健康原因禁止使用头顶行李箱。
根据Covid Tracking Project的数据，美国周四报告了超过3.9万例新感染病例。这接近每日新高。检测在上升，但过去一周阳性结果平均占总数的6.1%，高于一个月前的约5.4%。