On Wednesday, Jefferies reaffirmed its Buy rating on Boeing (NYSE:BA) shares with a steady share price target of $300.00. The aerospace giant is navigating a challenging period, with a forecasted cash outflow of $4.0-4.5 billion in the first quarter, which represents a $2 billion negative surprise. Additionally, Boeing's projected free cash flow (FCF) for 2024 has been reduced by $3 billion.
The revised outlook includes a lower estimate for 737 MAX deliveries in 2024, now expected to be 400 aircraft, down from the previous estimate of 500. This reduction equates to a monthly production rate of 33 units, compared to the prior rate of 42.
The updated delivery forecast has prompted Jefferies to adjust its 2024 FCF estimate for Boeing to $1.6 billion, a significant decrease from the initial $5.0 billion projection.
The cut in estimated profitability for Boeing's Commercial Airplanes segment by $3.3 billion is driven by the expectation of a negative margin in 2024. The anticipated margin is estimated at -4.1%, a stark contrast to the previous estimate of 3.8%. This change reflects the impact of lower production rates and concessions on the company's financial performance.
Boeing's financial challenges are partially attributed to the lower production and delivery rates of the 737 MAX, a critical model in the company's product lineup. The company has acknowledged these challenges, projecting a negative margin for the coming year, which indicates a tough road ahead in terms of profitability.
Despite these financial headwinds, Jefferies' stance on Boeing remains positive, with the firm reiterating its Buy rating on the company's stock. The share price target of $300 suggests confidence in Boeing's long-term prospects, despite the near-term obstacles reflected in the revised forecasts and delivery estimates.
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