On Monday, Jefferies, a global investment banking firm, adjusted its price target for Boeing (NYSE:BA), reducing it to $300 from the previous $315. Despite this change, the firm has maintained its Buy rating on the aerospace company's stock.
The adjustment follows Boeing's fourth-quarter results which showed a solid performance with $3B in free cash flow (FCF) for the quarter and $4.4B for the year 2023. The analysis by Jefferies suggests that while Boeing's production output is estimated to be lower than the maximum capacity of 38 aircraft per month, at around 35 per month, the company is still expected to deliver 500 of its 737 MAX aircraft in 2024, resulting in an anticipated $5.0B FCF.
Looking further ahead, Jefferies anticipates that Boeing's FCF will reach $8.2B in 2025, a figure that falls short of the previously projected $10B. This is attributed to the timing of rate breaks for the 737 MAX production. However, the forecast for 2026 is more optimistic, with an expected FCF of $10.3B.
The firm highlights that Boeing's stock is currently trading at a 7.3% yield on what is considered a depressed FCF. This figure represents a 41% discount compared to the S&P average. Based on this analysis, Jefferies sees potential upside in Boeing's share price driven by growth in FCF.
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