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On Friday, Citi analysts adjusted their outlook on Boeing stock, reducing the price target slightly from $209.00 to $207.00, while continuing to endorse the stock with a Buy rating. According to InvestingPro data, analyst targets for Boeing range from $85 to $250, with the stock currently trading at $178.50. InvestingPro's Fair Value analysis suggests the stock is currently overvalued. The revision followed Boeing's preannouncement of its fourth-quarter results, which included the expectation of $3.8 billion in additional charges impacting both its Commercial and Defense sectors.
The anticipated charges are attributed to higher costs stemming from a recent labor agreement and projected increases in supplier costs over the coming decade. Specifically, Boeing's Commercial division is facing a $1.1 billion charge related to the 777 and 767 programs, with an estimated $0.9 billion expected to affect cash flow through the mid-2030s. InvestingPro data reveals concerning metrics, including weak gross profit margins of 3.62% and negative EBITDA of -$3.99 billion. Get access to 8 more crucial ProTips and comprehensive financial analysis with InvestingPro. The Defense sector is looking at a $1.7 billion charge across several programs, including the KC-46A, T-7A, Commercial Crew, VC-25B, and MQ-25, with financial implications extending likewise through 2035.
Citi analysts highlighted that the charges in the Commercial division are associated with programs that are in forward-loss positions, which implies that these programs are currently expected to cost more than the revenue they will generate. The analysts anticipate that similar impacts on profitability will gradually reflect on the income statement, showing up as reduced margins over time.
In response to these updates, Citi has revised its financial estimates for Boeing through the year 2027. The new price target of $207.00 takes into account the challenges Boeing is facing, as well as the expected long-term impact on the company's financial performance. Despite the reduction in the price target, Citi's analysts maintain a positive stance on the stock, reaffirming their Buy rating. For deeper insights, InvestingPro offers a comprehensive research report on Boeing, one of 1,400+ stocks covered with detailed analysis and actionable intelligence for informed investment decisions.
In other recent news, Boeing Co (NYSE:BA). disclosed losses in its Q4 results due to strikes and program charges. The Commercial Airplanes segment projects a revenue of $4.8 billion, with pre-tax earnings charges of $1.1 billion on the 777X and 767 programs. The Defense, Space & Security division anticipates recognizing pre-tax earnings charges totaling $1.7 billion. Despite these challenges, Boeing plans for the first delivery of the 777-9 aircraft in 2026 and has resumed production of its 737, 767, and 777/777X aircraft models.
Moreover, Boeing's potential sale of its Jeppesen navigation unit has piqued the interest of major aviation suppliers and private equity firms. The sale is part of Boeing's strategy to streamline its operations and focus on its core businesses.
In terms of analyst upgrades, Barclays (LON:BARC) upgraded Boeing stock from Equalweight to Overweight, expecting sustained positive momentum in production and deliveries throughout 2025. These are the recent developments at Boeing Co.
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