Wedbush Securities said Boeing Co. (NYSE: BA) annual investor day yielded little incremental insight, but increased its confidence in the timing and production ramp of the new commercial programs. The brokerage maintained its outperform rating on shares of Boeing with a price target of $91.

As expected, the investor day focused on the commercial programs, but we continue to view the defense business profitability as just as important for the cycle and the stock. The decision on a new single aisle (NSA) is now expected by the end of 2011, not likely around the Paris Air Show, said Kenneth Herbert, an analyst at Wedbush Securities.

However, Herbert believes the company will do a new narrow body, not do the re-engine option, and clearly feels better now about the technology opportunity and composites that can allow for a significant leap over the A320neo in terms of performance.

The 787 production ramp is the key issue for profitability and sentiment around the stock over this cycle. Herbert continues to see an initial block of 1,000 aircraft, with full production (10 a/c a month) coming in mid-2014. He has greater confidence now in the potential profit profile for the 787, but it clearly will be a margin headwind over the cycle. ETOPS and FNR flight testing will begin in early June.

Herbert said margins in the defense business should remain in the high single digits, while we see a flat to down slightly scenario as the most likely for the defense top-line. The company continues to stick to its flat to moderately defense guidance, but did provide greater details on its cost cutting initiatives.

While the focus has shifted to the Boeing 787 production ramp and profitability, Herbert continues to see the first deliveries of the 747-8 and the 787 as positive catalysts for the stock. He sees EIS for the 747-8 in July and the 787 in August 2011.

Herbert continues to see Boeing as a core holding for commercial aerospace cycle exposure. He continues to see $8 a share in peak earnings potential, but with a stronger cash flow upside as airplane deliveries accelerate. The company sees a 40 percent commercial volume increase from 2010 through 2013, with a strong wide body outlook in 2011 than in 2010.

We believe Boeing stock is in a position to outperform the aerospace and the broader market over the next twelve months. We believe that with the increased confidence on the 787 EIS and production ramp, sentiment will continue to improve on the stock, which represents one of the best large cap ways to play the commercial aerospace recovery, said Herbert.

Boeing stock closed Wednesday's regular trading up 0.99 percent at $76.32 on the NYSE, while in the after-hours the stock rose 0.37 percent to $76.60.

Nyse Boeing 787 Air Show Investment