Canaccord Has Concerns With Boeing And Commercial Cycle, Downgrades Stock

"We see incremental risk to the FCF outlook from 777 rate and pricing pressure, and additional backlog risk due to increased airline investment in older aircraft as oil prices have remained depressed," Herbert said.

The analyst expects peak industry deliveries in 2019, while the probability of Boeing achieving rates of 57–60 per month in the narrow-body aircraft category expected to be low.

Herbert also believes that multiple expansion for the stock is likely to be limited due to concerns regarding the commercial cycle, despite deliveries likely to increase during 2017–2019. However, continued share buybacks are likely to provide a floor to the stock.

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"We believe retirements are a key factor, and the 2016 retirements through February of just 15 aircraft as compared to 69 in the same period in 2015 is a warning sign," the analyst mentioned.

Although passenger traffic continues to be strong, increased demand for and use of older aircraft, in the current low oil environment is likely to eventually affect backlogs.

In addition, pricing pressure also appears to be increasing, while lease rates on the newer generation aircraft likely to be under higher than expected pressure. The peak free cash flow estimate for 2019 has been lowered from $15 billion to $12 billion.