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Boeing shares under $200 represent an attractive entry point - Wolfe Research

Published 03/23/2023, 08:24 PM
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By Sam Boughedda

According to Wolfe Research analysts, Boeing (NYSE:BA) shares dipping below $200 means they are now at an attractive entry point.

The analysts said in a note that the slide below the $200 mark is in part due to management comments at a conference. On Wednesday, Boeing's CFO Brian West spoke at the Bank of America Global Industrials Conference.

"We see this as an attractive entry point. We're reiterating our Outperform rating and $220 price target as we remain confident in the path to $10B+ in FCF," wrote analysts.

"As production rates ramp and execution improves (may not be fully linear), the investor base confidence will also grow in the $10B+, and as that happens they'll begin discounting against that figure out in 2025/26, which when applying a historical 14-15x FCF multiple results in a $250+ price," they added.

At the investor conference, West "sized a 1Q charge" related to a known supplier quality issue on their 767 freighter/tanker aircraft, explained analysts.

"While he didn't specify an exact amount, he did put it <$500M and noted that 1Q margins would be negative vs. our prior 3.6% ($200M of EBIT). Importantly, the $3-5B of FCF for '23 was maintained, and while there were several other comments, the 767 charge was the only thing we found particularly incremental," the analysts wrote.

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