On Monday, JPMorgan revised its forecast for Boeing (NYSE:) shares, significantly lowering its target price for the aerospace giant. The new target is set at $230, up from the previous $270, while the company continues to maintain an Outperform rating on the stock.
The adjustment follows Boeing’s recent financial report presented at a rival conference last Wednesday. The JPMorgan analyst updated his estimate of Boeing’s cash generation in fiscal 2024 to $1.5 billion and expects cash losses of $4 billion in the first quarter.
These numbers are consistent with management comments from the update. To hit the minimum billion-dollar target for the year, Boeing would need to generate at least $5 billion in cash over the past nine months, up from the $5.2 billion it achieved in the same period in 2023.
While Boeing management maintained its $10 billion cash flow target for 2025-26, it indicated that target was more likely to be achieved later in the time frame. As a result, JPMorgan adjusted Boeing’s free cash flow estimate for 2026 to $8.5 billion, citing uncertainty about the timing of future cash flows.
The analyst also suggests that some decline in 737 orders is likely, highlighting management’s view of the future profitability of the 737 model as a critical factor. This aspect of Boeing’s business has been the subject of previous analyst reports.
Despite lowering its price target and financial estimates, JPMorgan reiterates its positive long-term outlook for Boeing. The analyst’s confidence is based on the company’s significant inventory of aircraft, which continue to be in high demand. Moreover, a potential acquisition of Spirit AeroSystems (NYSE:) is considered highly likely as Boeing intends to finance the deal without resorting to a share issue.
InvestingAbout Insights
Against the backdrop of JPMorgan’s review, the financial position and performance of Boeing shares remain of interest to investors. The aerospace giant, with a market capitalization of $116.32 billion, has seen its price decline markedly, down 27.49% over the past three months. The trend is consistent with JPMorgan’s price cut target as the market reflects the challenges Boeing faces.
InvestingPro data shows Boeing’s revenue growth has been robust, with growth of 16.79% over the trailing twelve months through the fourth quarter of 2023. However, the company’s gross margin for the same period was relatively low at 11.89%. This is consistent with one of InvestingPro’s tips, which highlights Boeing’s low gross margins, which could pose a challenge to profitability.
Looking ahead, Boeing’s next earnings date is April 24, 2024. Analysts predict the company will be profitable this year, a view echoed by InvestingPro. This optimism is tempered by the fact that six analysts have revised their earnings downward for the coming period, suggesting that while there are positive elements to the company’s outlook, caution is warranted.
Investors looking for more in-depth analysis can find more information on Boeing with InvestingPro, which includes additional tips such as the company’s share price volatility and how it trades at high EBIT and EBITDA valuation multiples. For those interested in a comprehensive investment tool, use the coupon code. PRONEWS24 to receive an additional 10% off annual or two-year Pro and Pro+ subscriptions, giving you access to a total of 11 InvestingPro tips for Boeing.
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