Berenberg lowers target price on Senior due to lower 737 MAX outlook
Analysts at Berenberg slightly lowered their target price on aerospace and defence firm Senior from 185.0p to 175.0p on Monday, but stated that a lower 737 MAX outlook appeared to be already priced in.
Berenberg highlighted that Senior had already provided initial guidance on the expected impact of lower Boeing 737 MAX production on 2020 financials and said that the lower outlook came as no surprise - given that production had been suspended since the start of the year, and both Boeing and suppliers had indicated a slower-than-previously-anticipated pace of recovery in production.
However, the German bank said that the fact that Senior shares closed down by just 30 basis points on Friday demonstrated that much of this reduced outlook was already in the price.
Nonetheless, the cuts to its earnings estimates were significant, down 31% in 2020 and 22% in 2021, and Berenberg said it could not yet rule out further downside - given remaining uncertainty on production rates among several customers over the medium-term.
"We maintain our 'hold' recommendation and await further clarity, trimming our price target to 175p," said Berenberg.