Boeing Stock Rating Downgrade

Investing.com reports that Bernstein analysts have downgraded Boeing's stock rating from Outperform to Market Perform. The price target has been revised significantly from $195 to $169 amidst recovery concerns.

Recent Events

Boeing’s latest quarterly report raised alarms. The continued strike by the International Association of Machinists (IAM) has further undermined investor confidence.

Despite a $21.1 billion capital raise that caused a 22% dilution but offered short-term support, analysts remain cautious. Douglas S. Harned emphasized the necessity for a compelling recovery plan in a Tuesday note.

Leadership and Recovery Challenges

New CEO Kelly Ortberg recognizes the urgent need for a cultural change, business stabilization, and better execution. However, Bernstein insists that the challenges ahead, including rebuilding the leadership team, remain significant.

“We need to see specifics on the plan for recovery and rebuilding leadership talent,” analysts mentioned.

Cash Flow Concerns

Bernstein highlights the negative outlook for Boeing's free cash flow (FCF) after Q3, predicting $4 billion negative in Q4 and $5 billion negative in 2025, a stark contrast from previous expectations.

With debt repayments exceeding $12 billion in the next 18 months, Boeing faces mounting financial pressure.

Recovery Path

Analysts identified critical recovery areas for Boeing: increasing 737MAX production, enhancing widebody deliveries, finishing certifications, integrating Spirit AeroSystems, and addressing defense sector losses.

“Clarity on the path to recovery is essential. The strike resolution will help but is insufficient on its own,” they concluded.