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Credit Suisse believes Boeing (NYSE:BA) will miss Street estimates for the first quarter, although the “near-term set-up looks solid,” analysts told investors in a note Monday. The analysts raised the firm’s price target on the stock to $220 from $200, maintaining a Neutral rating.
“We forecast 1Q sales/segment EBIT/adj. EPS $17,619m/($32m)/($1.38), below Street $17,673m/$393m/($0.85),” wrote analysts, who explained that their firm’s EBIT/EPS forecast is “primarily driven by lower widebody profitability at BCA and the KC-46 charge at BDS.”
“We see 1Q FCF as an outflow of ($1.96b), which is below Street ($1.5b), but still a marked improvement from last year’s ($3.6b) outflow. The liquidation of 787 inventory relative to last year’s build is the largest driver of FCF improvement,” they added.
Looking ahead, Credit Suisse expects BA to reiterate guidance, but on the positive side, “management likely formalizes timing on the 737 rate break to 38/months alongside the print.”
The analysts also revealed that they believe positive news on rates, together with another potential block extension on 787, likely drives upward revisions to ‘24/’25 estimates subsequent to the print and that revision story “makes BA worth owning into results,” said analysts, even though “the rate break news is likely in the stock to some extent at this point.”
“Arguably, the better reason to be tactically bullish is to catch the momentum we expect into the Paris Air Show; we think the combination of improving production/deliveries with what we expect will be a strong showing for orders at Paris could enhance investor confidence in BA’s path from here,” they continued.
Credit Suisse is tactically positive on the stock, even though they continue to find valuation to be a hurdle.
