Boeing's Leadership Sets Strong Tone; Credit Suisse Raises Target To $148

At its investor event on May 12, Boeing Co BA's CEO, Dennis Muilenburg, outlined a “sharpen and accelerate” strategy for the company future, which was based on innovation and growth, productivity and performance, and driven by the best talent and team.

Credit Suisse’s Robert Spingarn maintains a Neutral rating on the company, while raising the price target from $144 to $148.

What The CEO Said

Mentioning that the investor event was the first one for Muilenburg, Spingarn stated that the CEO “emphasized an opportunity for Boeing to deliver sustained top and bottom line growth over the next decade, and to be an industry leader in cash generation.”

Boeing’s CFO also expressed dissatisfaction with the existing segment margins, while reminding investors to focus on cash flow.

The analyst mentioned that cash flow growth was expected outpace earnings growth, with the decline in the deferred 787s and improvement in productivity.

Related Link: Boeing Gets 15 787-9 Dreamliners Orders From China Eastern Airlines

Outlook

Management expects cash flow to grow year on year in 2017, “despite the headwind from lower 777 deliveries and flat Y/Y 787 deliveries owing to the introduction of the 787-10,” Spingarn noted.

Management also stated that it intends to return 100 percent of Boeing’s future free cash flow to shareholders, with share buybacks continuing at a consistent pace.

“While we see all of the above as positive and sensible, and we are not currently overly worried about a down-cycle, we think the margin targets are quite challenging, especially with numerous bridge 777s and 737-NGs delivering in the next couple of years,” Spingarn added.