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Citi Raises Price Target On Boeing

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Citi raised its price target from $146 to $171 on Boeing Co (NYSE: BA) Wednesday and maintained a Buy rating following its Q4 earnings report.

Analyst Jason Gursky felt that the most important metric for Boeing was cash flow. It appeared that the company can generate approximately $14 FCF per share, “assuming 787 spending winds down (driven by mix and productivity),” but Gursky did not see this happening until 2017.

In terms of valuation, Gursky suggested that investors pay 14.3x FCF, which results in a 7 percent yield and a $200 stock price.

In addition to making the 787 program break-even, “management will need to create predictable earnings and cash flow outcomes, lest forecasting credibility take a hit – and with it valuation multiples" and "the company will need to continue to return cash to shareholders via repos and dividends,” according to the analyst note.

Ahead of reaching $14 FCF in 2017, the firm modeled FCF of $10 per share in 2015 and $12 in 2016.

The $171 price target results in a 7 percent yield on the firm’s 2016 FCF assumptions.

Boeing Co recently traded at $147.95, up 5.95 percent.

Latest Ratings for BA

DateFirmActionFromTo
Dec 2016Deutsche BankMaintainsBuy
Oct 2016Vertical ResearchInitiates Coverage OnHold
Oct 2016Standpoint ResearchDowngradesBuySell

View More Analyst Ratings for BA
View the Latest Analyst Ratings

Posted-In: Citi Jason GurskyAnalyst Color Long Ideas Price Target Analyst Ratings Trading Ideas

 

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