On Thursday, Stifel adjusted its outlook on Boeing (NYSE:BA) shares, reducing the price target to $230 from $240, while still recommending a buy. The revision follows comments from Boeing's CFO, Brian West, at an investor conference earlier today, indicating an anticipated lower free cash flow (FCF) in the second quarter, similar to the approximately $4 billion outflow in the first quarter, and projecting cash usage for 2024 instead of the previously expected generation of low-single-digit billions in FCF.
West's remarks highlighted that the company's financial performance might fall short of both Stifel's and the consensus expectations. This update is part of a pattern of the company issuing guidance and subsequently revising it downward. Contributing factors to the revised forecast include further delivery delays, primarily due to issues in China, and increased working capital requirements. Additionally, the defense sector has not shown signs of improvement.
The ongoing complexities with the proposed acquisition of Spirit AeroSystems (NYSE:SPR) have also played a role in the revised outlook. While a deal could still be finalized in the second quarter, progress has been slower than expected, and West signaled a shift in the potential funding strategy for the deal, suggesting that equity might be utilized.
Stifel also noted that until Boeing announces a new CEO, which is expected to occur this summer, the firm anticipates that Boeing's stock will likely stay within a narrow trading range. The new price target reflects these updated expectations and the challenges facing the aerospace giant.
InvestingPro Insights
Following Stifel's adjustment of Boeing's price target, a glance at the real-time data from InvestingPro provides a broader perspective on the company's financial health and market sentiment. Boeing's market capitalization stands at $105.59 billion, indicating its substantial presence in the industry, despite recent challenges. The company's revenue has grown by 8.37% over the last twelve months as of Q1 2024, showing some resilience in its top-line figures. However, the gross profit margin during the same period was 11.48%, reflecting the weak gross profit margins that Stifel's analysis pointed out.
InvestingPro Tips highlight that Boeing is a prominent player in the Aerospace & Defense industry, yet analysts have revised their earnings downwards for the upcoming period. This aligns with the concerns raised by Boeing's CFO about the anticipated lower free cash flow. Moreover, the stock price movements are quite volatile, which could be tied to the uncertainties surrounding the company, including delivery delays and the pending acquisition of Spirit AeroSystems.
For readers looking to delve deeper into Boeing's financials and market performance, InvestingPro offers additional insights and tips. There are 13 more InvestingPro Tips available, which can be accessed by using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. These tips can offer valuable guidance for investors considering Boeing as part of their investment portfolio.
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