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Baird maintains Outperform rating on Boeing shares

EditorTanya Mishra
Published 2024-10-14, 08:42 a/m
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Baird has reaffirmed its positive stance on Boeing (NYSE: NYSE:BA), maintaining an Outperform rating and a price target of $240.00.

The aerospace giant pre-announced its third-quarter financials after the market closed last Friday, revealing upcoming charges due to issues within its Commercial Airplanes (BCA) and Defense, Space & Security (BDS) divisions.

The charges are partly attributed to a work stoppage by the International Association of Machinists (IAM).

Boeing is scheduled to release its full third-quarter results on October 23. The company has indicated it expects to report a revenue of $17.8 billion for the quarter. Additionally, a GAAP loss per share of ($9.97) and negative operating cash flow of ($1.3) billion are anticipated. The company's cash reserves were reported to stand at $10.5 billion at the end of the third quarter.

In other recent news, Boeing has reported a significant third-quarter loss of $9.97 per share, with revenues anticipated to be at $17.8 billion and a negative operating cash flow of $1.3 billion. This financial setback comes in the wake of a strategic reset plan led by CEO Kelly Ortberg.

Despite the short-term impact on cash recovery, TD (TSX:TD) Cowen, maintaining a Buy rating on Boeing, projects a robust increase to an estimated $9 billion in cash flow per share by 2027.

The aerospace giant also announced a 10% reduction in its global workforce, resulting in the loss of 17,000 jobs. This development coincides with a delay in the first delivery of its 777X jet by a year. The workforce reduction and delivery delay follow a month-long strike by U.S. West Coast workers, halting production of several Boeing aircraft models.

Analysts from firms such as Great Hill Capital and Running Point Capital Advisors have weighed in on these recent developments. The layoffs might pressure employees to resolve the strike, while the company's past mismanagement poses long-term risks to Boeing's credit rating and share price.

In addition, Boeing is exploring capital-raising options, potentially through the sale of common stock or equity-like securities, to counterbalance its approximately $60 billion in debt and operating cash flow losses of over $7 billion in the first half of 2024.

Lastly, Boeing is facing a court hearing in Texas to determine if it will plead guilty to fraud under a deal with the Justice Department, which includes a fine of up to $487.2 million and commitments to enhance safety measures.

InvestingPro Insights

As Boeing prepares to release its full third-quarter results, InvestingPro data and tips provide additional context to the company's financial situation. Boeing's market capitalization stands at $93.05 billion, reflecting its significant presence in the aerospace industry. However, the company faces several challenges, as highlighted by InvestingPro Tips.

One InvestingPro Tip notes that Boeing "may have trouble making interest payments on debt," which aligns with the pre-announced negative operating cash flow of ($1.3) billion for Q3. Additionally, the tip indicating that Boeing is "not profitable over the last twelve months" is consistent with the expected GAAP loss per share of ($9.97) for the upcoming quarter.

The company's financial struggles are further underscored by its revenue growth, which shows a decline of 0.07% over the last twelve months, and a more significant quarterly revenue drop of 14.61% in Q2 2024. These figures support the InvestingPro Tip that "net income is expected to drop this year."

Despite these challenges, Boeing's fair value based on analyst targets is $203.5, suggesting potential upside from its current trading price. Investors considering Boeing should note that InvestingPro offers 11 additional tips for a more comprehensive analysis of the company's prospects.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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