On Thursday, CFRA, a prominent financial research firm, adjusted its outlook on Boeing (NYSE: NYSE:BA), reducing the aerospace giant's price target from $172.00 to $164.00. The firm has maintained its Sell rating on the stock. This decision by CFRA reflects concerns over regulatory challenges that Boeing faces, particularly with its 737 MAX production line.
The new 12-month price target of $164 represents a $8 decrease and is based on a 24x multiple of the projected earnings per share (EPS) for 2025. According to CFRA, this multiple is slightly below Boeing's long-term historical forward average but is justified due to the heightened regulatory risk surrounding the company. The firm has also revised its EPS estimates downward, cutting the 2024 forecast by $1.42 to $1.75 and the 2025 estimate by $0.32 to $6.85.
Boeing's production pace has notably slowed, with the company delivering only 54 commercial aircraft in the first two months of the first quarter of 2024. This marks a significant reduction from the 79 units delivered during the same period in 2023. The slowdown is attributed to the Federal Aviation Administration's (FAA) imposed restrictions on Boeing's 737 MAX production line. CFRA notes that it is currently unclear when these limitations will be lifted.
The firm also commented on Boeing's efforts to improve its tarnished reputation for engineering quality, recognizing the appointment of Steve Mollenkopf as Chairman of the Board as a potentially positive move. Mollenkopf's engineering background may contribute to Boeing's recovery in this critical area.
Furthermore, CFRA anticipates that Airbus (AIR FP), Boeing's main competitor, will continue to expand its market share lead in the commercial aircraft sector throughout 2024. This could present additional challenges for Boeing as it works to navigate the current regulatory landscape and rebuild its position in the industry.
InvestingPro Insights
As Boeing (NYSE: BA) navigates through its current challenges, real-time data from InvestingPro provides a comprehensive view of the company's financial health. According to the latest metrics, Boeing's market cap stands at $117.12 billion, reflecting the scale of the company in the Aerospace & Defense industry. Despite the regulatory headwinds and production slowdowns, the company has seen a revenue growth of 16.79% over the last twelve months as of Q4 2023, indicating some resilience in its business operations.
InvestingPro Tips suggest that Boeing's net income is expected to grow this year, which could signal a turnaround from the previous period where the company was not profitable. However, it's important to note that analysts have revised their earnings downwards for the upcoming period, and the company has been struggling with weak gross profit margins, at 11.89%. Furthermore, with the stock price having fallen significantly over the last three months, volatility remains a factor for potential investors to consider.
For those looking to delve deeper into Boeing's financials and future prospects, InvestingPro offers additional insights. There are 9 more InvestingPro Tips available that could help investors make more informed decisions. To access these tips and gain a deeper understanding of Boeing's valuation and industry position, consider subscribing to InvestingPro using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.