CHICAGO, July 6, 2012 /PRNewswire/ --Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include The Boeing Company (NYSE:BA), Chesapeake Energy Corporation (NYSE:CHK), Chesapeake Midstream Partners LP (NYSE:CHKM), Total SA (NYSE:TOT) and Statoil ASA (NYSE:STO).
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Here are highlights from Thursday's Analyst Blog:
Boeing Eyes Trillion-Dollar Market
Defense and Aerospace manufacturer, The Boeing Company (NYSE:BA) released its 2012 Current Market Outlook estimating a $4.5 trillion market for 34,000 new commercial airplanes in the next 20 years. Boeing's projection of growth is based on the strength of the commercial aviation market, recovery witnessed in world economies and strong demand for fleet addition and replacement. Airline traffic is forecast to grow at a 5% annual rate over the next two decades, with cargo traffic projected to grow at an annual rate of 5.2%.
Low cost carriers, with their ability to stimulate traffic with low fares, are growing faster than the market as a whole. There is also a strong demand to replace older, less fuel-efficient airplanes. Replacement accounts for 41% of new deliveries in the forecast. The market for new airplanes is set to become more geographically balanced in the next two decades. Asia-Pacific, including China, will continue to lead the way in total airplane deliveries. Widebodies, such as Boeing's 747-8, 777 and 787 Dreamliner, will account for almost $2.5 trillion dollars worth of new airplane deliveries with 40% of the demand for these long-range airplanes coming from Asian airlines.
The single-aisle market, served by Boeing's Next-Generation 737 and the future 737 MAX, will continue its robust growth. Boeing expects the single-aisle airplanes to be the major driver behind the demand growth, accounting for about 68% of the estimated airplane deliveries in the period 2012-2031 and approximately 45% of total value of the deliveries. This depicts a worldwide demand for 23,240 single-aisle jets worth more than $2 trillion.
This growth in the single-aisle airplane segment is mainly due to the popularity of the low-cost carriers business model throughout the world; expansion of air service in emerging markets such as India, China and Southeast Asia; and continuing instability of fuel prices, which is compelling airlines to accelerate replacement of older airplanes.
The twin-aisle market segment is expected to deliver roughly 23% of projected units and 46% of delivery in dollars. As per the report, 7,950 twin-aisle planes worth $2.1 trillion will be needed worldwide in the period 2012-2031. Further, the company predicts a demand for 790 large aircraft worth $280 billion, and 2,020 regional jets worth $80 billion.
Boeing expects the world freighter fleet to nearly double from the current strength of 1,740 aircraft to 3,200 at the end of the forecast period. Additions to the fleet will include 940 new-production freighters (market value of $250 billion) and 1,820 airplanes converted from passenger models. Large (more than 88.2 tons capacity / 80 tons) freighters will account for 680 new-build airplanes. Medium (44.1 to 88.2 tons / 40 to 80 tons) freighters will total 260 airplanes. No new standard-body freighters (49.6 tons / less than 45 tons) will be required, but there will be 1,120 standard-body conversions.
Boeing enjoys a unique position as the largest aircraft manufacturer in the world in terms of revenues, orders and deliveries, and is one of the largest aerospace and defense contractors in the world. Besides, its revenues are spread across more than 90 countries around the globe.
Chesapeake Offloads CHKM Stakes
Natural gas giant Chesapeake Energy Corporation (NYSE:CHK) has wrapped up its asset sale deal with private equity firm Global Infrastructure Partners ("GIP"). Under the deal, Chesapeake sold its pipeline properties for a total cash consideration of $2 billion.
Last month, Chesapeake, the second largest natural gas producer in the U.S., proposed to sell its interests in Chesapeake Midstream Partners LP (NYSE:CHKM) to GIP, as part of the three-tier asset sale pact. The closure of the asset sale deal allows GIP to own all of the general partner interests and 69% of the limited partner units of Chesapeake Midstream.
Chesapeake is also in the process of disposing certain Mid-Continent gathering and processing assets to Chesapeake Midstream Partners. Again, in the other tranche of the pact, the Oklahoma City-based company will sell its stakes in a subsidiary - Chesapeake Midstream Development LP - for an extra $2 billion to GIP. Importantly, the total divestiture will allow Chesapeake to shed its earlier announced capital expenditure by $3 billion over the next three years.
The company sold Chesapeake Midstream properties comprising pipeline networks in Texas, Louisiana, Pennsylvania and other gas-producing states. As of March 31, 2012, it had 3,953 miles of pipeline. About 75% of the partnership's revenue is generated from Chesapeake Energy, while the balance comes from Total SA (NYSE:TOT) and Statoil ASA (NYSE:STO).
Of late, Chesapeake has been in the news as it is under pressure to fund its capital budget amid diminishing cash flows on the back of falling natural gas prices. The company intends to offload as much as $11.5 billion to $14.0 billion worth of assets this year in order to bridge the funding gap of $9 billion to $10 billion.
Chesapeake holds a Zacks #3 Rank, which is equivalent to a Hold rating for a period of one to three months. We maintain our long-term Neutral recommendation for the company.
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