Financial services firm Stifel has adjusted its outlook on Boeing shares (NYSE: BA), lowering the stock price target to $240 from $260, while maintaining a Buy rating. This change follows the aerospace giant’s first-quarter financial results, which surpassed expectations in terms of adjusted earnings per share (EPS) and free cash flow (FCF). Boeing reported an adjusted EPS of ($1.13) and a FCF of ($3.9 billion), with sales figures also exceeding forecasts.
Despite better-than-expected first-quarter results, Boeing faced significant disruptions in its Commercial Airplanes division. The company’s near-term focus is expected to be on several key areas, including the 737 production, which hinges on the Federal Aviation Administration’s action plan and Boeing’s compliance with it. Other focal points include the 787 production, the drawdown of aircraft inventory, the ongoing search for a new CEO, and the certification processes for the 737-7/10 and 777X models.
Moreover, the potential acquisition of aerospace manufacturer Spirit AeroSystems (NYSE: SPR) is also on Boeing’s agenda. Stifel suggests that Boeing’s estimates are nearing a low point, indicating a potential for the company to outperform in terms of FCF in the future. Still, the firm anticipates that a sustained rally in Boeing’s share price is unlikely until the announcement of a new CEO.
The current uncertainties surrounding the company, including production issues and executive leadership, have led to a challenging start to 2024 for Boeing’s stock. Despite these challenges, the demand for Boeing’s products remains robust. Stifel expresses optimism that as the uncertainties begin to clear, there is a possibility for a meaningful recovery in Boeing’s share performance. The firm highlights that today’s financial results were better than expected, which could contribute to a rebound once the aforementioned issues are addressed.
