Boeing Set For Improved Deliveries And Production Rates, Goldman Sachs Analyst Says

Goldman Sachs analyst Noah Poponak stated that their analysis suggests that The Boeing Company BA (Buy rating, $243 price target) is expected to achieve 43 deliveries in June, comprising 34 737 MAX, three 787s, and six other aircraft.

Of these, around 26 of the 737 MAX deliveries are newly produced, with the remainder sourced from inventory. The numbers show an improvement in both total deliveries and production rates compared to earlier in the year, writes the analyst.

Boeing’s 2024 strategy starts with prioritizing product quality over immediate production ramp-up, intending to gradually boost output later in the year to meet demand, says the analyst.

Poponak says that June’s numbers mark a preliminary indicator that could support Boeing’s approach. Feedback from suppliers suggests that the company maintains monthly MAX deliveries in the 30s and mid-single digits for the 787, aligning with its strategic goals.

The analyst’s target price of $243 is based on achieving a 5.0% FCF yield on the projected 2025 free cash flow per share.

Poponak estimates EPS of $1.76 in FY24, $8.29 in FY25 and $13.52 in FY26.

However, the analyst cites risks related to air traffic growth pace, production ramp-up challenges in the supply chain, and operational performance in defense contracts.

Also Read: Boeing Receives Order For Four 777 Freighters From Turkish Airlines

This week, Boeing entered into a definitive agreement to purchase Spirit AeroSystems Holdings, Inc. SPR at $37.25 a share, a 30% premium to Spirit’s closing stock price on February 29.

Boeing stock has lost around 12% in the last 12 months. Investors can gain exposure to the stock via IShares U.S. Aerospace & Defense ETF ITA and Invesco Aerospace & Defense ETF PPA.

Price Action: BA shares closed down 0.60% at $184.31 on Wednesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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