On Thursday, Deutsche Bank adjusted its financial outlook for Boeing (NYSE:BA), reducing the aerospace giant's price target to $240 from the previous $285. The firm maintained its Buy rating on the company's stock despite the downward revision. The recalibration of the target price is primarily due to substantial cuts in Boeing's projected Earnings Before Interest and Taxes (EBIT), earnings per share (EPS), and free cash flow (FCF) for the years 2024 through 2027.
The significant reduction in financial forecasts is attributed to Boeing's recent policy changes concerning traveled work, which are expected to create near-term challenges in production, deliveries, and working capital. The most significant adjustment is a 58% decrease in the free cash flow estimate for 2024, with notable changes also affecting projections for 2025 and 2026.
The new price target reflects not only the lowered estimates but also an increase in the target free cash flow yield, now set at 8.0% compared to the previous 7.5%. This adjustment aims to account for the ongoing operational and regulatory hurdles Boeing faces and aligns with the company's current trading yield based on Deutsche Bank's revised 2026 forecast.
Deutsche Bank highlighted several downside risks for Boeing, including potential additional charges from Boeing Defense, Space & Security (BDS), further delivery deferrals, and delays in the certification of aircraft models such as the MAX 7/10 and 777X.
Additional concerns include the possibility of more quality issues, the impact of upcoming negotiations with the International Association of Machinists (IAM) union, and a slower-than-anticipated recovery in global air traffic growth. These factors collectively contribute to the more conservative financial outlook for the company.
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