On Monday, JPMorgan (NYSE:JPM) revised its outlook on Boeing (NYSE:BA) shares, with a notable reduction in the aerospace giant's price target. The new target is set at $230, down from the previous $270, while the firm continues to hold an Overweight rating on the stock.
The adjustment follows Boeing's recent financial update, presented at a competitor's conference last Wednesday. JPMorgan's analyst has updated his fiscal year 2024 cash generation estimate for Boeing to $1.5 billion and anticipates a first-quarter cash burn of $4 billion.
These figures align with the management's commentary from the update. To reach the low single-digit billion target for the year, Boeing will need to generate at least $5 billion in cash over the final nine months, compared to $5.2 billion achieved in the same period of 2023.
While Boeing's management has maintained its cash flow target of $10 billion for 2025-2026, they have indicated that this goal is more likely to be achieved later in the specified timeframe. Consequently, JPMorgan has adjusted its 2026 free cash flow estimate for Boeing to $8.5 billion, citing uncertainties regarding the timing of future cash flows.
The analyst also suggests that some reduction to the 737 booking rate is probable, highlighting management's perspective on the future profitability of the 737 model as a critical factor. This aspect of Boeing's business has been a subject of the analyst's previous reports.
Despite the reduced price target and financial estimates, JPMorgan reaffirms its positive long-term outlook on Boeing. The analyst's confidence is rooted in the company's substantial backlog of aircraft, which continues to be in high demand. Moreover, the potential acquisition of Spirit AeroSystems (NYSE:SPR) is deemed highly likely, with Boeing intending to finance the deal without resorting to equity issuance.
InvestingPro Insights
Amid the revisions by JPMorgan, Boeing's financial position and stock performance remain areas of interest for investors. The aerospace giant, with a market capitalization of $116.32 billion, has experienced a notable price decline, with a 27.49% drop over the last three months. This trend aligns with JPMorgan's reduced price target, as the market reflects the challenges Boeing faces.
InvestingPro data indicates that Boeing's revenue growth has been robust, with a 16.79% increase over the last twelve months as of Q4 2023. However, the company's gross profit margin during the same period was relatively low at 11.89%. This aligns with one of the InvestingPro Tips highlighting Boeing's weak gross profit margins, which could be a concern for profitability.
Looking ahead, Boeing's next earnings date is set for April 24, 2024. Analysts predict the company will be profitable this year, a sentiment echoed by an InvestingPro Tip. This optimism is tempered by the fact that six analysts have revised their earnings downwards for the upcoming period, suggesting that while the company's outlook has positive elements, caution is warranted.
Investors seeking more in-depth analysis can find additional insights on Boeing with InvestingPro, which includes further tips such as the company's volatile stock price movements and its trading at high EBIT and EBITDA valuation multiples. For those interested in a comprehensive investment tool, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking access to a total of 11 InvestingPro Tips for Boeing.
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