TD Cowen has adjusted its price target for Boeing (NYSE: NYSE:BA), bringing it down to $190 from the previous $200, while maintaining a Buy rating on the stock.
The revision follows Boeing's third-quarter earnings report, which revealed a loss of $9.97 per share. The loss is attributed to Boeing's new strategic reset plan, spearheaded by CEO Kelly Ortberg, aimed at revamping the company's operations.
The strategic reset plan, as outlined by Boeing's management, is expected to impact cash recovery in the short term, specifically in the years 2025 and 2026.
Despite this, the analyst from TD Cowen believes that the initiatives being put in place will yield significant benefits in the longer term. They project a robust increase to an estimated $9 billion in cash flow per share (CFPS) by the year 2027.
The analyst's comments reflect a cautious optimism regarding Boeing's future financial health. "Q3's $9.97 loss/share reflects new CEO Kelly Ortberg's strategic reset plan to turn BA around. It includes assumptions & initiatives, which will restrain cash recovery in 2025-26; but they should produce robust lift to an est. $9B in 2027," the analyst remarked.
This reset is seen as a necessary step to position Boeing for a stronger financial performance in the future.
In other recent news, Boeing Co . is set to reduce its global workforce by 10%, amounting to 17,000 jobs, and delay the first delivery of its 777X jet by a year. The move follows a month-long strike by U.S. West Coast workers that has halted production of several Boeing aircraft models, including the 737 MAX, 767, and 777. The company is also planning to halt the 767 freighter program after fulfilling its remaining 29 orders.
In financial news, Boeing anticipates third-quarter revenues to be at $17.8 billion, with a loss per share of $9.97, and a negative operating cash flow of $1.3 billion. These figures are reportedly better than the negative $3.8 billion cash burn expected by analysts, according to LSEG data.
Boeing is also exploring options to raise capital, potentially through the sale of common stock or equity-like securities, in response to the company's approximately $60 billion in debt and operating cash flow losses of over $7 billion in the first half of 2024.
The company is also facing a court hearing in Texas to determine if it will plead guilty to fraud under a deal with the Justice Department, which includes a fine of up to $487.2 million and commitments to enhance safety measures.
InvestingPro Insights
Recent InvestingPro data and tips provide additional context to Boeing's financial situation and market position, complementing TD Cowen's analysis. Boeing's market capitalization stands at $93.05 billion, reflecting its significant presence in the Aerospace & Defense industry. However, the company faces several challenges, as highlighted by InvestingPro Tips.
One crucial InvestingPro Tip notes that Boeing "may have trouble making interest payments on debt," which aligns with the company's current financial struggles and the strategic reset plan mentioned in the article. This tip underscores the importance of the company's efforts to improve its financial health.
Another relevant InvestingPro Tip indicates that Boeing is "trading near its 52-week low," with a substantial year-to-date price total return of -42.06%. This information provides investors with a clearer picture of the stock's recent performance and supports TD Cowen's decision to lower the price target.
It's worth noting that InvestingPro offers 11 additional tips for Boeing, providing a more comprehensive analysis for investors seeking deeper insights into the company's prospects. These tips, along with real-time metrics, can be valuable tools for investors evaluating Boeing's potential in light of its ongoing strategic reset.
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