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Wednesday, UBS analyst Gavin Parsons (NYSE:PSN) increased the price target for Boeing stock (NYSE:BA) to $217 from the previous $208, while reaffirming a Buy rating for the aerospace giant. Currently trading at $177.78, Boeing’s stock has shown significant volatility, with analyst targets ranging from $85 to $250. According to InvestingPro analysis, Boeing is currently overvalued based on its proprietary Fair Value model. Parsons highlighted that although Boeing is in the early stages of its recovery, the company is making significant strides, particularly with its MAX program. The production and delivery of the MAX have resumed at a pace that exceeds UBS’s expectations. This progress comes despite challenging financial metrics, with InvestingPro data showing negative EBITDA of -$4 billion and a weak overall Financial Health score. InvestingPro subscribers have access to 10 additional key insights about Boeing’s financial position.
Boeing has reported progress in the supply chain ramp-up and in meeting the Federal Aviation Administration’s (FAA) key performance indicators and cooperation benchmarks. Despite the potential supply chain risks, such as those posed by strike stoppages, improvements in engine and fuselage production, coupled with inventory buffers, are expected to help stabilize Boeing’s production ramp-up. Parsons noted that while there is limited visibility, UBS continues to model MAX production at 38 units per month in October, with the company indicating the possibility of a higher rate within 2025, which would be positive for UBS’s projections.
The Defense sector of Boeing’s business faces challenges, but Parsons emphasized that higher commercial production rates are key to driving positive free cash flow. He anticipates a clear path to normal margins at regular production rates, projecting double-digit billion positive free cash flow by 2027, with potential for further increases thereafter.
Parsons also pointed out that Boeing is exploring strategic transactions to improve its balance sheet health without compromising long-term growth by reducing research and development (R&D) or capital expenditures (capex). In his view, the new CEO, Kelly Ortberg, has established a sound strategy, and successful execution of this plan is expected to lead to a successful turnaround for Boeing.
In other recent news, Boeing has been a focal point of analyst attention, with both Vertical Research Partners and Bernstein SocGen Group maintaining their respective Hold and Market Perform ratings. Vertical Research raised Boeing’s price target to $180, while Bernstein set their target at $169. Citi analysts, however, slightly reduced their price target for Boeing from $209 to $207, maintaining a Buy rating. Meanwhile, Barclays (LON:BARC) upgraded Boeing stock from Equalweight to Overweight.
These revisions followed Boeing’s recent financial and operational developments, including significant fourth-quarter losses driven primarily by the IAM strike and defense program charges amounting to $1.7 billion. Boeing also faced an operational challenge when a United Airlines flight operating a Boeing 787-8 had to return to Lagos due to a loss of cabin pressure, resulting in 33 passengers being injured.
Despite these setbacks, Boeing continues to progress with its 737MAX production ramp-up and plans to resume widebody aircraft deliveries. On a strategic front, Boeing’s potential sale of its Jeppesen navigation unit has drawn interest from major aviation suppliers and private equity firms, indicating a move towards streamlining its operations. These are the recent developments concerning Boeing.
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