On Wednesday, Stifel reaffirmed its Buy rating on Boeing (NYSE:BA) stock with a steady price target of $270.00. The financial firm addressed Boeing's recent financial performance, noting the aerospace giant's first-quarter free cash flow (FCF) is expected to be negative $4-4.5 billion.
This figure is notably higher than Stifel's own estimate of a $2 billion deficit for the same period. The discrepancy arises from Boeing's updated forecast, which includes recent cost increases, higher inventory levels, and a slower production ramp-up for the 737 MAX aircraft.
Boeing's Chief Financial Officer discussed the company's financial outlook at a conference, revealing that not all of the first-quarter cash flow shortfall would be recoverable throughout the year. Despite this, Boeing anticipates a significant improvement in FCF, targeting $10 billion in the 2025-2026 period. This projection aligns with Stifel's expectations and did not come as a surprise to the firm.
In addition to its financial projections, Boeing is in the midst of negotiations with Spirit AeroSystems (NYSE:SPR). Management emphasized they would not use equity to finance any potential acquisition of Spirit. Furthermore, Boeing is considering divesting certain smaller assets within its Defense, Space & Security (BDS) portfolio, as has been reported in the media.
Stifel has adjusted its earnings per share (EPS) and FCF estimates for Boeing for the years 2024 and 2025. The firm reduced its 2024 forecasts but left its 2025 FCF estimate unchanged at approximately $7.7 billion. The decision to maintain the Buy rating and $270 price target reflects Stifel's confidence that Boeing is on a path to improved build rates.
This, coupled with the strength of Boeing Global Services (BGS) and improvements in the BDS segment, is expected to result in substantial FCF growth over the next two-plus years. Stifel believes this growth will be a key driver of stock performance, especially given the high demand for new aircraft.
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