Leonardo Investors Overreacted to Boeing Supply Issue, Citi Says -- Market Talk
Testo: 1420 GMT - Leonardo is unlikely to take a material hit from the non-comforming parts it supplied to Boeing for its 787 Dreamliners, Citi analysts say. The Italian aerospace-and-defense company's shares fell yesterday on news that it had supplied the faulty parts. The share-price drop shaved around $330 million off Leonardo's market cap, Citi says. Based on this, the market seems to expect that Leonardo will bear full liability and that fixing the issues will cost more than $1 million per Dreamliner jet, Citi says. The U.S. bank says both things are unlikely. Leonardo ascribed the issue to a subsupplier, but even if the liability for repairing the parts ended up falling with the company, the costs wouldn't be high, Citi says.