Despite the company's difficulties, Boeing's (NYSE: BA) stock still has some admirers on Wall Street. While a Baird analyst lowered the price target on the stock to $240 from $300 recently, he also reiterated an outperform rating on it. It's also worth noting that the $240 price target, although reduced, implies a 35% upside to where the stock is trading now.
The buy case for Boeing
The price target's lowering makes sense in light of Boeing's recent announcements. Instead of generating free cash flow in the "low single-digit billions" in 2024, management now expects an outflow as it continues to fall behind on its delivery schedules.
That said, the bad news in the first half won't necessarily repeat in the future, and Boeing still has a multiyear backlog to deliver on. This could be the fearful time that investors might start to be greedy in. Throw in the prospect of a new CEO taking a fresh approach to the company at the end of the year, and Boeing's stock could climb a wall of worry.
Headwinds brewing
However, if you do buy the stock, you better be ready for (forgive the pun) potential turbulence. There's a labor negotiation coming up, the potential acquisition of Spirit AeroSystems is another possible cash drain, the defense business is set for another loss in the second quarter, and ramping airplane production isn't easy at the best of times.
In this environment, the last thing investors want to hear is that the company is on track to burn cash this year, but that's exactly what's happening.
Image source: Getty Images.
Meanwhile, management has maintained its long-held outlook for $10 billion in free cash flow in 2025/2026. That outlook might need to be walked back so investors can fully reset expectations. There are plenty of headwinds for Boeing, which means downside risk.
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Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
