Boeing Hosted Its First Investor Day In 4 Years After 737 MAX Debacle: What Do Analysts Think?

Zinger Key Points
  • Boeing anticipates free cash flow of $1.5 billion to $2 billion in 2022, and $3 billion to $5 billion in 2023.
  • The company predicts at least 800 commercial aircraft will be delivered in 2025 and 2026.

Boeing Co. BA held an Investor Day to showcase its Boeing 737 plant and for investors to meet with company executives to discuss strategic priorities, business updates and financial goals.

The last Investor Day Boeing had was in 2018 and the company has not provided meaningful forward guidance since early 2019 when two 737 MAX crashes sent the company into crisis.

What Happened: In contrast to the consensus prediction of $670.3 million, the company anticipated a free cash flow of $1.5 billion to $2 billion for 2022. A crucial indicator of Boeing's aircraft deliveries and ability to reduce debt is free cash flow.

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Boeing expected its free cash flow in 2023 to be between $3 billion and $5 billion due to an increase in the number of 737 and 787 deliveries. By 2025, management also anticipated normalized free cash flow of $10 billion and revenue of $100 billion.

The company predicted at least 800 commercial aircraft will be delivered in 2025 and 2026, with a rise in 737 and 787 models.

Analysts React: Ken Herbert of RBC Capital Markets said: “We are maintaining our Outperform rating and our $170 price target. We believe the current skepticism from investors provides an opportunity for the stock, so long as Boeing can execute on its updated guidance targets.”

Kristine Liwag of Morgan Stanley research said: “We left Boeing’s Investor Day incrementally more positive on the stock as the company provided unexpected supporting details for a visible and credible path to $10 billion of free cash flow. Reiterate Overweight-rating and [price target] of $213."

Seth Seifman of J.P. Morgan said: “We rate BA Overweight. We expect Boeing to emerge from the 737 MAX crisis and begin generating cash in 2022, with the stock being driven by multiple catalysts including the return of the 787, 737 MAX re-certification in China and increased deliveries.”

Scott Deuschle of Credit Suisse said: “While we raise our [price target] to $121 (from $98) on higher estimates, we ultimately reiterate our Underperform rating. Many of the thesis points from our initiation still hold (risk of softening orders, defense execution), while we believe that valuation is increasingly challenged.”

Why It Matters: In the midst of a broad stock market drop on Thursday, Boeing shares increased 6.41% to $156.78 at publication. The stock reversed on Oct. 26 and fell more than 9% as a result of the significant Q3 earnings miss before regaining its 50-day line.

While supply difficulties and economic fears linger, the company is working on a turnaround.

Read Next: How Jerome Powell Swung The Market Pendulum As He Went From 'Dovish' And 'Pivot' To Most 'Hawkish'

Photo: Courtesy Boeing

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Posted In: Analyst ColorMid CapNewsGuidancePrice TargetTop StoriesAnalyst RatingsTrading IdeasGeneralaerospaceAirplaneairplanesCredit SuisseJ.P. MorganKen HerbertKristine LiwagMorgan StanleyRBC Capital MarketsScott DeuschleSeth Seifman
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