Boeing’s $4.7 bn purchase of Spirit AeroSystems represents “fair value”

Investing.com — Boeing’s (NYSE:) $4.7 billion deal to purchase Spirit AeroSystems (NYSE:) represents fair value for the jet parts supplier and is unlikely to be challenged by a higher bid, according to analysts at Barclays.

On Monday, planemaker Boeing agreed to buy back Spirit AeroSystems, which it had previously sold almost two decades ago. The move comes as Boeing looks to improve its safety record following a dangerous mid-air fuselage blowout earlier this year.

Under the terms of the deal, Boeing would repurchase its former subsidiary for rougly $37.25 per share, implying an enterprise value of $8.3 billion including debt.

In a note to clients, the Barclays analysts said that amount is equivalent to eight times Spirit AeroSystem’s peak core earnings and about 7% free cash flow yield on their 2026 forecast.

“We […] do not see a higher bid emerging,” the Barclays analysts said.

They also downgraded their rating of Spirit AeroSystem’s stock to “Equal Weight” from “Overweight”, flagging that they do not expect the company to be profitable or cash flow positive until 2025.

Meanwhile, the analysts said Spirit AeroSystem’s separate binding deal with Airbus will increase its exposure to the European jetmaker and Boeing rival, “better balancing its portfolio.” Airbus is set to take over core activities at four of the Spirit AeroSystem’s factories around the world.