On Thursday, Baird revised its price target for Boeing (NYSE:BA) shares, reducing it to $200 from the previous figure of $240. Despite this adjustment, the firm maintained its Outperform rating on the aerospace giant's stock. The change in price target comes after Boeing reported its third-quarter results for 2024, which showed a weaker performance in its Commercial Airplanes segment (BCA) and expanding losses in its Defense, Space & Security division (BDS).
The downturn in BDS's performance is attributed to the ongoing strike by the International Association of Machinists (IAM), which has put the company's recovery efforts on hold. The IAM recently voted with a 64% majority to reject the current contract proposal, indicating that the labor dispute is set to continue into the near future. Baird anticipates that Boeing will enhance its contract offer to resolve the strike, with a potential settlement expected to be reached in November.
The analyst from Baird noted that the strike's impact has necessitated a revision of their Free Cash Flow (FCF) assumptions for Boeing, leading to the lowered price target. However, the firm remains optimistic about Boeing's prospects, viewing the eventual resolution of the strike and a possible equity raise as positive catalysts that could clear the path for the company's stock, likely within the month of November.
The ongoing strike and its implications on Boeing's financial recovery have been a focal point for investors and industry observers. The delay in resolving the labor dispute continues to exert pressure on the company's operations and financial outlook.
In other recent news, Boeing has been in the spotlight due to a range of developments. Barclays (LON:BARC) maintained an Equalweight rating on Boeing's stock, emphasizing the company's ongoing cash burn through 2025.
The company has signaled its readiness for an equity raise of approximately $20 billion, independent of the outcome of the International Association of Machinists (IAM) vote. This follows Boeing's recent announcement of a $4 billion free cash flow (FCF) burn in the fourth quarter and an estimated $3-5 billion cash burn in 2025.
Moreover, Boeing has been grappling with a prolonged strike by approximately 33,000 workers, further straining the company's operations. This labor dispute has compounded the impact of production halts of its top-selling 737 MAX jets, as well as its 777 and 767 widebody aircraft. Despite these challenges, CEO Kelly Ortberg has emphasized the importance of the Defense, Space & Security unit to Boeing's strategy.
In its recent quarterly earnings call, Boeing revealed a slight revenue decline to $17.8 billion and a core loss per share of $10.44. Barclays' analysis suggests a return to positive FCF of $4 billion in 2026, $6 billion in 2027, and $8 billion in 2028.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Boeing's financial situation, complementing Baird's analysis. The company's market capitalization stands at $97.03 billion, reflecting its significant position in the aerospace industry. However, Boeing's financial metrics reveal some challenges. The company's revenue for the last twelve months as of Q3 2024 was $73.29 billion, with a concerning revenue growth of -3.25% over the same period.
InvestingPro Tips highlight potential concerns for investors. One tip notes that Boeing "may have trouble making interest payments on debt," which aligns with the financial strain mentioned in the article, particularly in light of the ongoing strike and its impact on cash flow. Another tip indicates that "18 analysts have revised their earnings downwards for the upcoming period," suggesting that the market anticipates continued difficulties for Boeing in the near term.
These insights from InvestingPro provide valuable context to Baird's price target revision and the overall financial health of Boeing. For investors seeking a more comprehensive analysis, InvestingPro offers 8 additional tips for Boeing, providing a deeper understanding of the company's current position and future prospects.
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