Analyst Matthew Akers of Wells Fargo reiterated a Sell rating on Boeing (BA – Research Report), boosting the price target to $113.00.
Matthew Akers has given his Sell rating due to a combination of factors impacting Boeing’s financial outlook. One significant concern is the company’s free cash flow (FCF) projections, which Akers believes are overly optimistic. Since Boeing’s 2022 investor day, various challenges such as deteriorating defense performance, increased interest rates, and additional costs from union contracts have emerged, leading Akers to estimate a lower FCF of $7-8 billion by 2027, compared to the consensus of $9 billion.
Another critical factor is the 777X program, where Akers anticipates continued cash burn until around 2030 due to the learning curve associated with new aircraft production. Additionally, Boeing’s defense segment has incurred substantial charges, which are expected to impact cash flow negatively in the coming years. The union agreements are also projected to increase costs, and while some of these may be offset by inflation adjustments, the overall impact is still seen as negative. Furthermore, Akers points out that the company’s interest expenses and 401(k) contributions pose additional financial headwinds. Consequently, Akers has set a price target of $113, representing a significant downside from current levels.