Boeing to Take Off With Commercial Transition, Says Drexel Hamilton

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NEW YORK ( TheStreet) -- Boeing shares were up about a half a percent in Monday trading after Drexel Hamilton analysts said they expect the aircraft producer to take off as the company weans itself from military contracts and transitions into commercial spheres.

Drexel Hamilton raised its price target for Boeing shares $10 to $120. Shares were up 0.6% in afternoon trading Monday, reaching $104.77 a share.

Drexel Hamilton analysts in a note Monday raised their earnings estimates by 9 cents in 2013 to $6.61 a share and 20 cents in 2014 to $7.54 a share.

The analysts are basing their improved outlook on the announcement of new commercial models and increased orders on available commercial jets. Boeing had only made one delivery on its 787 model in the first quarter, but sales have grown to 16 in the second. The company has announced that larger and improved 777s and 787s are to be released, continuing a trend of single aisle aircrafts as the twin-aisled 747 build rates fall.

The aerospace company faced obstacles in their military contracts as the armed forces have begun to purchase F-35 fighter jets. Lockheed Martin's F-35 Lightning II has replaced the F-15 Super Hornet and F-18 Eagles made by Boeing and their subsidiary McDonnell Douglas. The F-35 has been deemed a next-generation fighter capable of ground attack, reconnaissance and air defense missions. The jet has stealth capabilities and the F-35B variant is able to complete short take-offs and vertical-landings.

While vehicles such as the anti-submarine aircraft P-8 Poseidon have been ordered by allied militaries, the F-15 and F-18 appear to be obsolete, analysts said.

"Prospective F-15 and F-18 candidate allied militaries increasingly look sucked into the F-35 vortex," wrote Drexel Hamilton analyst Richard Whittington in a July 8 note.

Boeing maybe outgunned in the jet class but its larger military aircrafts are expected to cushion the revenue blow. The company still maintains its contracts to provide the U.S. military with refueling and transport vehicles such as the KC-46A, the C-17 Globemaster III and the CH-47 Chinook helicopter. The tilt rotor V-22 Osprey will continue to operate with Marine Corp, Army Special Operations and Navy personnel.

"This aircraft is the single most significant transformation of air force special operations since the introduction of the helicopter... nearly every mission we have faced in the last 20 years could have been done better and faster with the V-22" said Air Force Lt. Gen. Donald Wurster of U.S. Air Force Special Operations Command in January of 2012.

Whittington gives Boeing a buy rating with a $120.00 price target. Shares have fluctuated within a 52-week range of $68.17 and $104.08. Boeing has a market capitalization of $77.6 billion.

-- Written by Robert Arenella in New York