Investing.com - BofA Securities has cut its 12-month target price on Boeing (NYSE:BA), saying the aircraft manufacturer is facing reputational and operational risks, but demand remains robust long term.
BofA Securities, the investment banking division of Bank of America (NYSE:BAC), hosted Brian West, Boeing’s CFO, at a conference on Wednesday, looking for insight into the near-term impact of the ongoing 737 developments into production, deliveries and free cashflow.
As a result BofA cut its price objective to $210 from $225, keeping its ‘neutral’ rating.
At 09:50 ET (1350 GMT), Boeing stock traded 0.2% higher at $188.21, down almost 30% year-to-date.
“We think that financial targets will necessarily need to take a seat further back to compliance, safety, and quality assurance,” analysts at the bank said, in a note dated March 21.
“We lower our FCF estimates to reflect operational and customer penalties from a delayed and highly scrutinized 737 production ramp up.”
Boeing’s latest problem occurred in January when a cabin panel blowout forced an Alaska Airlines flight to make an emergency landing.
U.S. regulators briefly grounded certain planes for safety checks, a move less severe than the grounding of all MAX-family jets worldwide nearly five years ago following a pair of fatal crashes.
That said, BofA noted that the civil aviation market remained strong, and Boeing was a key player in the sector.