Latest news with #Harned
CNBC
23-06-2025
- Business
- CNBC
Defense stocks were already outperforming. How the Iran conflict changes their outlook
Defense stocks moved higher again on Monday as investors reacted to the continued escalation of the conflict in the Middle East, which brings with it the potential for long-term changes in military spending. Bernstein analyst Douglas Harned said in a note to clients that this could prove to be an inflection point for the defense sector but it is still too soon to tell. "Events such as this have historically led to significant changes in defense spending and for the trajectory of defense stocks. But, the ultimate paths for the geopolitical environment and scale of military threats determine the outcome," Harned said. The behavior of the largest ETF tracking the sector could be a sign that investors are not fully betting on a widespread, long-term conflict. Overall, the iShares U.S. Aerospace and Defense ETF (ITA) has gained almost 17% since the start of May, with just nine down days compared to 27 up days, and is well ahead of the broader market year to date. However, the fund is also little changed since its previous record closing high June 9. ITA 3M mountain This major defense sector ETF has not made a new high in two weeks. Other major funds like the Invesco Aerospace & Defense ETF (PPA) and the SPDR S & P Aerospace Defense ETF (XAR) show similar patterns. Harned suggested that the idea of a weakened Iran could be behind some of the recent stalling of the rally in defense stocks, but said there is risk that the perceived danger in the region increases again. "We could see ongoing US involvement (despite administration statements to the contrary) or aggressive efforts to fill the vacuum by Russia or China. These outcomes could lead to prolonged instability and rising global defense spending - in other words, the extended escalation scenario above. Much is left to play out here," Harned wrote. The Bernstein note was published before Iran retaliated with a strike on a U.S. military base in Qatar. Another factor to keep in mind that it is not just spending by the U.S. military that can boost this sector. Jefferies analyst Sheila Kahyaoglu pointed out in a note to clients that there could a reminder of that at this week's NATO summit. "NATO is expected to commit to 3.5% of GDP on defense at the upcoming summit from 2% today, which represents $150BB+/yr of incremental procurement, of which historically has been 2/3rds to US products," the Jefferies note said. To be sure, trying to sort through the daily headlines of this conflict could make less investment sense than pulling back to see that defense stocks have been long-term winners. "Over the two and a half-year period from the start of 2023 through June 20, 2025 the three aerospace and defense ETFs showed greater cumulative price appreciation compared to a fund that replicates the S & P 500. The aerospace and defense stocks also outperformed the S & P 500 fund over 1-, 3-, 5 and 10-year periods," Oppenheimer chief investment strategist John Stoltzfus said in a note to clients. — CNBC's Michael Bloom contributed reporting.
CNBC
20-06-2025
- Business
- CNBC
The scale of Trump's 'Golden Dome' is a boon for defense stocks even if it isn't completed, says Bernstein
Major defense stocks can still benefit even if President Donald Trump 's "Golden Dome" project fails, according to Bernstein. The prospect of completing the missile defense system before the end of Trump's term in 2029, which the president has cited as his goal for the project, is highly unlikely, analyst Douglas Harned wrote in a note to clients last week. However, that doesn't mean the effort won't drive business for the defense industry, he said. "Even if the system fails to deliver, we expect elements to survive and for companies to profit off efforts, even when they do not succeed — and spending could go much higher," Harned said. Creating such an expansive defense system will likely require contributions and cooperation from the entire industry, Harned explained. Also, Trump has also mentioned extending contracts to some nontraditional companies, Harned said, adding that this decision may not make the project any easier. "While we see little chance that the system will be complete within three years, we expect money will be spent and benefit most major defense contractors," he said. Harned expects L3Harris Technologies , RTX, Northrop Grumman , Lockheed Martin , BAE Systems and Boeing will be among the beneficiaries. Bernstein rates Boeing and L3Harris Technologies overweight, and has a market perform rating on the rest. Harned's $273 per share price target on L3Harris implies nearly 10% upside from Wednesday's $248.83 close, while his $249 price target for Boeing suggests roughly 25% upside. Boeing shares closed at $197.68 on Wednesday, giving it a 13% year to date gain. L3Harris shares are up 19% over the same period. (Markets were closed Thursday.) Trump estimated last month that the project will cost roughly $175 billion, but Harned anticipates it will ultimately cost more than that. About $25 billion has already been included in the 2026 U.S. defense budget, according to Trump. The project's ambitions are a big challenge, according to the analyst. "In order to truly defend the entire US," he said, "it will be necessary to go back to a complex multi-layered system, that can address a wide range of attacks." "The cost of true coverage of the US will be extreme, with the problem that the system would always need to evolve as enemies evolve their capabilities," Harned said. "The situation is analogous to cybersecurity. It is much less expensive to attack than it is to defend."
CNBC
05-06-2025
- Business
- CNBC
Wall Street sentiment on Boeing is improving as 737 MAX production increases
Sentiment on Wall Street been strengthening steadily on Boeing shares, with the aerospace behemoth finally gaining some momentum. Sixty-nine percent of analysts surveyed by FactSet rate Boeing either buy or overweight. That's up from 52% at the end of 2024. Consensus price targets call for about 2% upside from Wednesday's close. The stock has been on a tear in 2025 as well, with a gain of nearly 20%, while the S & P 500 has ticked up 1.5%. JPMorgan, Wolfe Research and Bernstein are among the Wall Street shops that have raised price targets for Boeing stock over the past month. JPMorgan and Wolfe Research both attributed their more upbeat view to the improved pace of production for the troubled 737 MAX and a record-breaking order from Qatar Airways that followed President Donald Trump's visit to the Middle Eastern country. For Bernstein analyst Douglas Harned, Boeing's ability to steadily increase monthly production of its 737 MAX, with the hopes of stabilizing at around 38 per month, is a key reason he thinks sentiment has shifted. "This stock is a momentum-type stock, and people will want to be in it well ahead of when they're actually there," Harned told CNBC when discussing the company's monthly production goals. "What you've seen is slowly, but surely, skeptical people have started to see the evidence — or hear about it at least — in a more compelling way than in the past." Boeing CEO Kelly Ortberg said last month that the company was resuming plane deliveries to China in June, after the Trump administration's trade war prompted a pause. Ortberg also told Bernstein at the firm's Strategic Differences Conference last month that Boeing could produce as many as 42 737 MAX planes by the end of the year. "We think of this as truly 'back to the future' as we look at how the stock behaved back before 2019, prior to the 737MAX groundings and Covid, when there was optimism about the future," Harned wrote in a Monday note, where he also labeled Boeing stock a top pick. Harned's $249 per share price target implies about 17% upside from Wednesday's $211.98 close. BA YTD mountain Boeing stock in 2025. Boeing's troubles extend back to 2018, when Lion Air Flight 610 crashed killing all 189 aboard. After a second deadly crash, the 737 MAX fleet was grounded for 20 months . Just last year, Boeing faced more trouble after the door flew off of one of its 737 MAX 9's midair. Wolfe Research analyst Myles Walton said in a May note to clients that he had already been optimistic that 2025 would see significantly improved production times for the 737 MAX fleet, however, the Qatar order provided more confidence that the stock could continue to run. "A Big Beautiful Order should help (not yet) big beautiful cash flow," the analyst said. Walton upped his price target to $230 per share from $195 last month, which equates to about 9% upside from Wednesday's close. "With balance sheet concerns addressed for the next few years and a backlog of ~$500b, we see potential for BA to outperform if the company can improve execution," JPMorgan analyst Seth Seifman wrote in a note last month. "Specifically, this means gradually increasing production of 737s and 787s while bringing the 777X closer to entering service." Despite Seifman's optimism, JPMorgan's $200 per share price target implies shares could slide 6% from here.
CNBC
20-05-2025
- Business
- CNBC
Bernstein raises its price target on this stock with a 'history of momentum'
Bernstein is doubling down on its bullish outlook on Boeing . Analyst Douglas Harned maintained his outperform rating on Boeing shares and assigned a fresh price target of $249, up from $218. His new target suggests roughly 21% upside for the stock, which is up 16% this year. Harned sees a strong growth runway for Boeing and said its defense business could return to being a powerful cash generator. He also highlighted recent developments such as Boeing's restart of deliveries to China, its deal with Qatar Airways announced last week to provide up to 210 widebody jets and easing tariff concerns. "Positive events support the stock's upward momentum," the analyst wrote in a Monday note to clients. "Last week, we saw large new widebody orders, a restart of deliveries to China, and support for defense programs, raising our confidence in Boeing's growth path. There is still more upside potential." "None of this is without risk, given Boeing's many missteps over the last decade. But, as positive elements appear to line up, we believe there is more risk in not owning a stock with a history of momentum," Harned added. To be sure, the analyst still has concerns about seemingly light May 737 deliveries so far and timing for certification on Boeing's 737 Max 7 and Max 10 aircrafts. Harned's rating comes nearly a month after he upgraded Boeing to outperform from market perform. The analyst had cited Boeing's progress on 737 Max and 787 production ramps, improvement in defense performance, and strong cash position that outweighed concerns of tariff impacts as his reasoning for the upgrade. Analysts polled by LSEG have an average price target on Boeing shares that indicate just 1% potential upside. Twenty of the 29 covering the stock have a strong buy or buy rating.
Yahoo
01-05-2025
- Business
- Yahoo
'We'll Happily Take Them All': Boeing Stock (NYSE:BA) Gains as Another Buyer for the Chinese Planes Emerges
It was just a few days ago when we heard that Air India was interested in buying the refused Chinese planes that China turned away as the result of the tariff war. And that gave aerospace stock Boeing (BA) a boost back then. Now, another potential buyer has come forward, ready to deal, and that is also giving Boeing a boost. As a result, Boeing shares are up over 2% in Monday afternoon's trading. Discover companies with rock-solid fundamentals in TipRanks' Smart Value Newsletter. Receive undervalued stocks, resilient to market uncertainty, delivered straight to your inbox. Aeroflot stepped in after hearing several Boeing aircraft were available for immediate purchase, though not without some caveats. Air India then stepped up as well, without the caveats, ready to make a deal. Now, Riyadh Air in Saudi Arabia is ready to join in the hunt, and there may be enough planes to go around. Reports noted that there may be 'dozens' of planes involved here, and Riyadh Air CEO Tony Douglas has made it clear Riyadh Air is ready to deal. 'What we've done…is made it quite clear to Boeing, should that ever happen, and the keyword there is should, we'll happily take them all,' Douglas said in an interview with Reuters. Given that the jet market remains 'tight,' it is a safe bet that the Chinese planes will easily find new buyers. We have already seen three such buyers step forth. Meanwhile, analysts are giving Boeing a leg up as well. Douglas Harned, analyst with Bernstein—who has a four-star ranking on TipRanks—boosted the rating and the price target on Boeing, which likely contributed to Boeing's gains today. Harned bolstered the rating from Market Perform to Outperform, and sent the price target up from its previous level of $181 to a new $218. That represents, roughly, a 23% premium against Friday's closing numbers, reports note. Basically, Harned notes, Boeing's turnaround project is bearing fruit, and in a big way. Boeing has now basically recovered to the point where it is on track to grow like the Alaska Air (ALK) door plug incident never happened. Naturally, Boeing still has problems. Controversies aplenty, government overwatch, and more are all on the table. But Boeing is likely to come out of all of this stronger, Harned notes. Turning to Wall Street, analysts have a Moderate Buy consensus rating on BA stock based on 15 Buys, three Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 4.9% rally in its share price over the past year, the average BA price target of $200.47 per share implies 10.2% upside potential. See more BA analyst ratings Disclosure Disclaimer & DisclosureReport an Issue Sign in to access your portfolio
