On Thursday, CFRA, a prominent financial research firm, revised its outlook on Boeing (NYSE:BA), reducing the aerospace giant's stock price target from $151.00 to $147.00. The firm has maintained its Sell rating on the stock.
The adjustment follows Boeing's indication that its second-quarter commercial aircraft deliveries might not show an improvement from the first quarter's performance, which included only 83 units, with just 67 being the company's leading 737 MAX model.
The price target reduction reflects a 26 times multiple of Boeing's projected earnings per share (EPS) for 2025, aligning with the company's long-term historical forward average. CFRA's analyst has expressed concerns over Boeing's financial performance, foreseeing an operating loss per share of $0.31 for 2024, a downward revision from the previously estimated EPS of $0.37. Moreover, the firm has lowered its 2025 EPS estimate by $0.39 to $5.65.
Boeing's recent update on its quarterly delivery outlook corroborates CFRA's view, which has been cautious since February, that the recovery from the Alaska Air (NYSE:ALK) flight 1282 incident could extend over a more extended period. The incident has cast a shadow over the company's recovery efforts, and CFRA remains doubtful that Boeing will meet its production target of 50 units per month for the 737 MAX by the years 2025 or 2026.
The Federal Aviation Administration's (FAA) continued close monitoring of Boeing's manufacturing operations was also noted as a potential challenge. Moreover, the ongoing search for a successor to CEO Dave Calhoun, who is set to depart at the end of the year, adds to CFRA's skepticism. The analyst from CFRA believes that appointing an external candidate as CEO is crucial for a significant shift in the company's culture.
InvestingPro Insights
Recent data and analysis from InvestingPro provide a deeper look into Boeing's financial health and market position. With a market capitalization of $105.95 billion, Boeing's valuation reflects its prominence in the Aerospace & Defense industry.
Still, the company's financial metrics indicate challenges, such as a negative P/E ratio of -48.89, reflecting analysts' concerns that Boeing will not be profitable this year. The company's gross profit margin stands at 11.48% over the last twelve months as of Q1 2024, which aligns with CFRA's concerns about Boeing's financial performance.
InvestingPro Tips suggest that Boeing's stock price movements have been quite volatile, with a 1-month price total return of 10.11% but a decline of 7.24% over the past three months. These fluctuations could be attributed to the factors CFRA has highlighted, such as the FAA's scrutiny and leadership uncertainties. Moreover, with 12 analysts revising their earnings downwards for the upcoming period, it seems the market is anticipating further challenges for Boeing.
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