On Wednesday, Northcoast Research adjusted its stance on Boeing (NYSE:BA), shifting from a Neutral to a Sell rating and setting a new target price for shares at $140. The downgrade reflects heightened concerns about the aerospace giant's financial health ahead of its upcoming quarterly earnings report, which is anticipated to be released in less than two weeks.
The investment firm's decision comes after a tumultuous quarter for Boeing, marked by unusual incidents involving aircraft parts dropping from the sky and alarming revelations regarding safety protocols. Whistleblower accounts have also contributed to the growing unease about the company's operational challenges.
Analysts at Northcoast Research suggest that Boeing may face significant headwinds in terms of its cash flow and balance sheet stability. The firm's baseline scenario now projects that Boeing will generate $9 billion in free cash over the next few years, a decrease from the previously estimated $16 billion, with the company currently holding $11 billion on hand.
Moreover, the report indicates that the company has not accounted for potential Federal Aviation Administration (FAA) penalties, costs of airline compensation, or repercussions from whistleblower allegations. These factors may further strain Boeing's financial resources.
The acquisition of Spirit Aerosystems (SPR) is also under scrutiny, as the investment firm questions the feasibility of such a transaction without the infusion of outside funds.