Proactive Investors - Boeing Co (NYSE:BA, ETR:BCO) shares are trading down nearly 30% in the year-to-date and at just 11 times the airplane manufacturer’s $10 billion free cash flow target, making now a good opportunity to buy the stock according to analysts at UBS.
“New aircraft demand remains at record levels, supply challenges create an undersupplied market for years to come, and Airbus has limited capacity to further expand market share,” the analysts wrote in a note to clients.
“As long as these factors remain in place, we see Boeing production rates and free cash flow growing significantly from current levels.”
The bank’s analysts have a ‘Buy’ rating on Boeing and a 12-month price target of $275. Boeing shares traded hands at about $180 at noon on Tuesday.
They believe a great deal of the near- and long-term risks to the stock have been priced in.
On free cash flow, they see the market pricing in $8.5 billion relative to their $11 billion estimate and Boeing's fiscal 2026 guidance of $10 billion.
They see free cash flow of negative $2.3 billion for the fiscal first quarter of 2024 reflecting lower MAX deliveries and commercial orders.
“First flights, a leading indicator of new-build deliveries, slowed in February and March, indicating March and April deliveries could be slow,” they wrote, forecasting the delivery of 25 aircraft during March and 68 for the quarter.
“We believe lower near-term MAX delivery expectations have contributed to the recent leg lower in shares, with a slow start to the second quarter now expected.”
Bank of America (NYSE:BAC) analysts also forecast soft deliveries across Boeing’s programs in March.
They pointed out that as of March 14, Boeing has delivered 13 737 MAX-8 but no other variants so far, with 737 production expected to hover around the mid-teens for the next few months.
“We remain our ‘Neutral’ on Boeing as we think that it will be able to continue to benefit from the robust global demand environment and the long-run benefit from increased quality assurance, despite possible short- to medium-term risks,” the BofA analysts wrote.