On Friday, UBS made a downward adjustment to Boeing's (NYSE:BA) price target, setting it at $240, a reduction from the previous $250. Despite this change, the firm maintains a Buy rating on the aerospace giant's shares. The revision comes in light of Boeing's guidance for relatively unchanged aircraft deliveries in the second quarter compared to the first, influenced by a halt in deliveries to China and additional work required on the 787 model.
UBS notes that for Boeing to meet its delivery targets for the quarter, the company's output in June will need to be equivalent to the combined deliveries of April and May. However, the start of June has been promising. The analyst points out that the MAX model's first flight instances hit a peak in May with 24 flights, the highest since October 2023, and marked the third consecutive month of sequential growth from a low in February.
The firm's outlook for Boeing includes the delivery of 400 MAX aircraft in 2024, a slight decrease from the previously estimated 425. This forecast is contingent on first flights reaching a rate of 38 per month by the end of the year and the assumption that deliveries to China will fully resume in the third quarter. The estimate is based on 270 units from production and 130 from inventory.
Additionally, UBS predicts Boeing will deliver 70 units of the 787 model in 2024, down from the initial estimate of 85. This expectation is set with the assumption that first flights will increase to 5 per month by year-end and that the pace of inventory deliveries will accelerate once the wing/body rework is completed. The delivery forecast for the 787 includes 30 production units and 40 from inventory.
The updated price target reflects the challenges Boeing faces with delivery schedules and the ongoing situation regarding its China market operations. Despite these hurdles, UBS's Buy rating indicates a confidence in Boeing's recovery and future performance.
In other recent news, Boeing made significant strides with its Starliner spacecraft, successfully docking it at the International Space Station (ISS) with NASA astronauts Barry "Butch" Wilmore and Sunita "Suni" Williams onboard. The achievement marks a crucial milestone for Boeing, positioning Starliner as a potential competitor to SpaceX's Crew Dragon capsule. In related developments, Boeing CEO Dave Calhoun is scheduled to address a Senate panel regarding ongoing safety concerns with the company's 737 MAX series.
The company's Starliner spacecraft is an integral part of NASA's Commercial Crew Program, which collaborates with private companies to develop new spacecraft and launch systems. Despite previous technical issues and delays, the successful docking suggests positive progress for the Starliner project.
Meanwhile, financial firm Citi has reaffirmed its confidence in Boeing, following reports of significant aircraft campaigns by international airlines expected to boost wide-body aircraft production. This anticipated demand could lead to increased production rates, contributing to Boeing's financial growth. These developments underscore recent advancements for Boeing in both space travel and commercial aviation sectors.
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