What Happened?
Shares of aerospace and defense company Boeing (NYSE:BA) jumped 7% in the morning session after CFO Brian West provided constructive updates about the company's financial position at an investor conference. He added that the business was "broadly tracking to expectations" with the March 2025 delivery of 787 jets similar to the previous month. These updates suggested that the company's operations may be stabilizing.
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What The Market Is Telling Us
Boeing’s shares are not very volatile and have only had 4 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 7 months ago when the stock dropped 8.3% on the news that Wells Fargo analyst Matthew Akers downgraded the stock's rating from Equal Weight (Hold) to Underweight (Sell) and lowered the price target from $185 to $119. The new price target implied a potential 25% downside from where shares traded when the downgrade was announced.
The analyst called out cashflow concerns relating to BA's efforts to build new aircraft. Akers added, "Boeing (BA) had a generational free cash flow opportunity this decade, driven by ramping production on mature aircraft and low investment need...But after extensive delays and added cost, we now see growing production cash flow running into a new aircraft investment cycle, capping FCF a few years out."
Looking ahead, the analyst predicted that Boeing might have to issue more stock (potentially dilutive to existing shareholders) to shore up its balance sheet and fund future aircraft investments.
Boeing is down 0.2% since the beginning of the year, and at $171.55 per share, it is trading 11.1% below its 52-week high of $192.99 from March 2024. Investors who bought $1,000 worth of Boeing’s shares 5 years ago would now be looking at an investment worth $1,756.
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