On Monday, Deutsche Bank (ETR:DBKGn) reaffirmed its Buy rating and $225.00 price target for Boeing (NYSE:BA), highlighting a month-over-month increase in the quality and quantity of 737 MAX aircraft deliveries for May. The bank's analysis, based on Cirium and public flight tracking data, noted that Boeing delivered a total of 24 aircraft in May, matching the number delivered in April.
The May deliveries included 19 737 MAX aircraft, an increase from the previous month, along with 1 commercial 767, 2 787s, and no 777s. This shift in delivery dynamics indicates a focus on the 737 MAX, with an improvement in the aircraft coming from long-term storage and production lines. In comparison to April, Boeing saw a rise in the number of 737 MAX aircraft delivered from long-term storage, with 3 in May versus 7 in April. Additionally, the number of aircraft delivered fresh from production or work in progress (WIP) increased to 16 from 9 in the previous month.
While the 737 MAX saw a positive trend, the 787 and 777 models experienced a decrease in deliveries. The 787 deliveries dropped by 2 units from April to May, and the 777 deliveries decreased by the same amount, with no units delivered in May. The report indicated that this could affect market confidence unless there is an acceleration in deliveries of both the 737 and the 787/777 models.
Boeing also completed deliveries of 2 KC-46 aircraft to the United States Air Force, contributing to the total count of 24 aircraft for May. The consistency in overall delivery numbers, combined with the noted improvements in the 737 MAX segment, suggests potential for further improvements in the coming months.
Deutsche Bank's commentary emphasized the importance of increasing delivery rates for Boeing's key aircraft models to strengthen market confidence in the company's second-half free cash flow (FCF) projections. The focus remains on Boeing's ability to maintain and enhance the delivery pace for its commercial aircraft, particularly the 737 MAX, in the near term.
InvestingPro Insights
As Boeing (NYSE:BA) continues to navigate its recovery, recent data from InvestingPro offers a mixed perspective on the company's financial health and market performance. With a market capitalization of $109.03 billion, Boeing's challenges are reflected in its negative P/E ratio of -49.84, indicating investor concerns about profitability. This is further emphasized by an adjusted P/E ratio for the last twelve months as of Q1 2024 at -86.64, signaling heightened skepticism about future earnings.
InvestingPro Tips suggest that Boeing is a prominent player in the Aerospace & Defense industry, yet it's currently facing weak gross profit margins of 11.48%, which may be a point of concern for investors looking at the fundamentals. Additionally, the stock's price movements have been quite volatile, with a 1-week price total return of 1.77% but a significant year-to-date price total return drop of -31.86%. Analysts have revised their earnings downwards for the upcoming period, and the consensus does not anticipate the company will be profitable this year, highlighting the importance of Boeing's operational improvements and delivery rates in the coming months.
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