Unlock Premium Data: Up to 50% Off InvestingProCLAIM SALE

This is when Boeing stock recovery may start: TD Cowen

Published 05/21/2024, 08:14 PM
© Reuters.
BAC
-

TD Cowen's latest note suggests that while Boeing (NYSE:BA) may face a challenging second quarter, a strong recovery is anticipated in the latter half of the year. 

Boeing's productivity enhancements are expected to drive a substantial increase in free cash flow (FCF) to $10 billion by 2026. Despite current hurdles, TD Cowen reiterates its Buy rating on Boeing.

The second quarter is likely to underperform market expectations due to sporadic 737 deliveries and ongoing production issues. Management previously warned that deliveries would be "sporadic" and "lumpy" until mid-year. 

The bank noted that only 18 "clean" fuselages were approved from Spirit AeroSystems (NYSE:SPR) in April, and Boeing needs to pass the FAA's 90-day audit in late May. 

Consequently, Q2 delivery numbers are projected to be lower than Q1, with an estimated revenue of $6.8 billion, 10% below consensus. Cash outflow is expected to reach $3 billion, doubling the Street's forecast.

TD Cowen forecasts a "hockey stick" recovery in the second half of 2024. As SPR accelerates the delivery of "clean" 737 fuselages, Boeing's productivity and delivery rates are expected to improve significantly.

This is expected to drive a sequential lift in Q3 and Q4, with Boeing potentially achieving a delivery rate of approximately 38 aircraft per month by the end of 2024. In Q4, Boeing's sales are anticipated to align with market expectations, while FCF could exceed estimates at around $6 billion.

Nevertheless, several key issues, including labor negotiations and the potential acquisition of SPR, could constrain Boeing's stock in the short term. 

Despite these hurdles, TD Cowen remains optimistic about Boeing's long-term prospects, suggesting significant gains may begin in the latter half of 2024 as production processes stabilize and strategic initiatives take effect.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.