Aerospace stock Boeing’s (BA) cash crunch is now widely known, but there is a growing body of concern that the firm’s borrowing plans will not be able to pull it out of its nose dive for long. Investors seemed willing to stick around, but that only went so far, as Boeing shares were up fractionally in Thursday afternoon’s trading.
A report from Quartz detailed that a range of rating agencies are watching Boeing very closely to see how its plans to sell billions of dollars worth of stock and convertible bonds will impact its operations.
With Boeing’s credit rating currently approaching junk bond territory, and a plan to raise up to $35 billion in cash while a still-ongoing strike is costing the company tens of millions of dollars a day, the concern is that this is just delaying the inevitable. S&P (SPGI) already noted that Boeing “…remains exposed to higher-than-expected cash usage and adjusted debt for the next year or two, which could further delay the expected recovery…”
Legal and Financial Troubles
While Boeing’s financial troubles are fairly well documented at this point, there are new concerns about a legal problem that, for a while, looked resolved. Specifically, a federal judge in Texas is considering whether or not to actually approve that plea deal that Boeing struck with the Justice Department back in July, and Boeing’s financial woes may have some bearing on that case.
Judge Reed O’Connor has the final say on the plea deal, and the families of crash victims are looking for bigger fines and an actual trial, with fines potentially reaching $24.8 billion. But O’Connor has already asked Boeing for more information, including how its DEI policies would impact plans to select a “third-party monitor” to handle Boeing’s safety program.
The only real upside for Boeing right now is that Emirates Airlines in Dubai has placed an order for new 777F freighters, though the number and delivery schedule are less clear.
Is Boeing a Good Stock to Buy Right Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on BA stock based on 14 Buys, five Holds, and two Sells assigned in the past three months, as indicated by the graphic below. After a 16.1% loss in its share price over the past year, the average BA price target of $197.83 per share implies 27% upside potential.
