Boeing (NYSE:BA) recently said it expects flat deliveries in Q2 compared to Q1, impacted by a pause in China deliveries and 787 rework.
To meet this, June must match April and May combined, though the company is “off to a good start so far,” UBS analysts said in a note.
More crucial, UBS notes, is the increase in MAX first flights, with 24 in May, the highest since October 2023 and showing three months of sequential improvement from February's low of 10.
“Extrapolating this forward, we think BA can deliver 400 MAXs in 2024 - down from our prior estimate of 425 - assuming first flights reach 38/mo by year-end and China deliveries resume fully in 3Q,” analysts said in a note.
“We think BA can deliver 70 787s in 2024 - down from our prior estimate of 85 - assuming first flights reach 5/mo by year-end and inventory deliveries pick up as wing/body rework is completed,” they added.
Based on the rate of deliveries and inventory of aircraft, UBS projects a significant $8 billion free cash flow (FCF) swing from the first half to the second half of the year.
Moreover, the investment bank lowered its 2024 FCF estimate from $900 million to a negative $1.7 billion, reflecting production and delivery challenges.
Alongside these adjustments, UBS analysts also trimmed their price target on BA stock from $250 to $240.