Bernstein Sees Boeing's Dividend Increase, New Buyback Plan As 'Positive Signals'

• Shares of Boeing Co BA have been volatile in 2015 and are up 10 percent year-to-date.
• Bernstein’s Douglas S. Harned maintained an Outperform rating on the company, with a price target of $196.
• Boeing’s cash flow position is good and the company is likely to continue rewarding shareholders, Harned stated.

Boeing announced a new $14 billion share repurchase authorization to replace its previous $12 billion authorization. Analyst Douglas Harned expects the repurchase to be completed over the next two years.

The company also hiked its dividend to $1.09 per share, marking an increase of 20 percent, and taking the dividend yield to above 3 percent. Harned added that the two announcements confirm the company’s strong cash position.

Boeing’s free cash flows are expected to continue growing as unit margins on the 787 improve and costs come down. Harned mentioned that the company is likely to continue rewarding shareholders.

The company’s shares are likely to be driven primarily by Boeing Commercial Airplanes, or BCA. “From a cyclical standpoint, Boeing is in a strong position with its core commercial programs. We expect planned production rate plans to hold despite any cyclical concerns,” the Bernstein report noted.

International order flows have helped Boeing Defense offset some of the weakness from the US budget, Harned commented.