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Analysts at the investment bank explained that the bullish outlook stems from Boeing’s progress towards achieving its full-year delivery targets for both the 737 and 787.
Citing AeroAnalysis data, BofA said that with just one more delivery needed, Boeing is within striking distance of hitting the lower end of its 375-400 full-year target for 737 deliveries. Since the start of December, 23 deliveries have been completed, and analysts anticipate a potential return to a production rate of 31 aircraft per month later in December, as the company has already manufactured 16-17 737s.
The firm also noted that the 787 program is tracking well, with only four deliveries required by the end of the month to reach the 70-80 target for the year.
“With ten aircraft currently undergoing production test flights, the company is well-positioned to reach its FY23 target of 70-80 787s, requiring only four additional deliveries by the month’s end. Other December deliveries thus far include one 767 and two 777s,” said BofA. “We continue to expect FCF of $3.4bn in 2023e.”
One wrinkle in the delivery schedule is the postponement of the first 787 delivery flight to China in over two years. Initially slated for December 14, it has now been pushed back to December 31, noted the bank. While the exact reason for the delay remains unclear, BofA suggests three possibilities: the need for additional customer acceptance flights, a supplier issue at Spirit AeroSystems impacting roughly 12 aircraft, or even politically motivated circumstances.
Despite this hiccup, BofA remains confident in Boeing’s long-term prospects. They anticipate the company generating $15 per share in free cash flow by the end of 2026. “We raise our PO to $275 from $250 to reflect a cyclicals’ re-rating as the market prices an easing interest rates’ environment,” they stated.
At the time of writing, Boeing shares are up 1%, trading above the $263 mark.
