The financial challenges of Boeing: Sales rating due to excessive optimistic FCF projections and 777x cash burn

The analyst Matthew Akers from Wells Fargo repeated a sales rating for Boeing (BA – Research report), increase the price target to $ 113.00.

Matthew Akers has given his sales rating due to a combination of factors that affect Boeing’s financial prospects. One of the main concern is the Free Cashflow (Frei -Cashflow) of the company (FCF), which Akers believes that they are excessively optimistic. Since Boeing’s investor day 2022, various challenges such as the deterioration in defense performance, the increased interest rates and the additional costs from union contracts, which will estimate a lower FCF of $ 7 to $ 8 billion by $ 9 billion by 2027 by 2027.
Another critical factor is the 777x program, in which Akers continues to expect money burning by 2030 due to the learning curve connected to the production of new aircraft. In addition, the Boeing defense segment has resulted in considerable fees that will negatively influence the cash flow in the coming years. The union agreements should also increase the costs, and although some of them can be compensated for by inflation adjustments, the overall effect is still considered negative. In addition, Akers points out that the interest costs of the company and 401 (K) contributions represent additional financial headwinds. As a result, Akers set a price target of 113 US dollars, which is a significant disadvantage compared to the current level.

Questions or comments about the article? Write to [email protected]