Boeing Worth Just $104 Per Share, UBS Says

Loading...
Loading...

UBS’ David E Strauss maintained a Neutral rating for Boeing Co BA, with a price target of $104.

The company’s 2015 FCF benefitted from BCA inventory tailwind as well as 787 deffered improvement offsetting lower customer repayments and higher cash taxes, analyst David Strauss said. He added, “We see $7-8B as peak FCF as worse 737 pricing on transition to MAX along with MAX working capital build, lower 777 volume/pricing, low levels of customer prepayments and higher R&D and cash taxes mostly offset 787 improvement.”

Boeing’s deffered production cost per unit is estimated to have declined to $6M in Q4 on 32 units produced from $19M in the previous quarter. The 787 blended unit cost estimate is now ~$130M, which is about 5 percent lower over the previous year, with declining unit cost being mostly offset by higher 787-9 mix.

Strauss expects 787 cash burn to improve by $1-$2B per year in 2016-2017, and slowing in 2018 on 787-10 production.

“Out prepayments model indicates a smaller benefit to cash from advances/progress payments from here. Out prepayments model has correlated well with actual prepayments other than during 2014, when total prepayments at $7B were much higher than expected,” the UBS report noted.

Loading...
Loading...
date
ticker
name
Price Target
Upside/Downside
Recommendation
Firm
Posted In: Analyst ColorReiterationAnalyst RatingsDavid E StraussUBS
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...