On Tuesday, Boeing (NYSE:BA) stock received a reiterated Outperform rating and a steady $210.00 price target from Wolfe Research, following the aerospace company's submission of an updated contract offer to its machinists union. The new proposal includes enhanced wages, bonuses, and retirement benefits, with a deadline for ratification set for the end of the week.
The updated offer proposes a 30% general wage increase, which marks an improvement from the previously suggested 25%. It also includes an immediate 12% raise, followed by 6% increases in the subsequent years of 2025, 2026, and 2027. This revised wage structure represents a notable increase from the earlier offer of an 11% raise on day one and 4% raises in the first two years, with a 6% raise in the final year.
In addition to wage improvements, the deal ratification bonus has been raised to $6,000 from the previous $3,000. The updated contract also addresses one of the contentious points of the previous offer by reinstating the Aerospace Machinists Performance Plan (AMPP) Bonus, which was initially set to be replaced by a Boeing-funded contribution to an IAM 401k.
Furthermore, the company has enhanced its 401k contribution scheme. Boeing now pledges to match 100% of an employee's contribution up to 8% of their salary, an increase from the former 75% match. This is in addition to Boeing's automatic contribution of 4% to employee 401k plans.
The Wolfe Research analyst highlighted the speed at which the work stoppage could be resolved and noted that even if the union vote fails this Friday, there appears to be a clear path to reaching an agreement on the contract. The analyst's outlook remains positive on Boeing's stock, with the expectation that the company's efforts to resolve its labor dispute may soon bear fruit.
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