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Boeing Stock Dips on Production, Cash Flow Setbacks
1 Nov
Summary
- Boeing delays 737 MAX production ramp-up significantly.
- Free cash flow projections revised downward by management.
- 777X certification remains on track for mid-2027.
Boeing has again disappointed investors with revised production and cash flow targets. The company's projections for ramping up 737 MAX production have been pushed back, potentially by as much as a year.
Management's updated free cash flow (FCF) guidance for 2026-2029 falls short of previous Wall Street consensus expectations. This delay in production is a significant factor impacting FCF.
Adding to concerns, the wide-body 777X faces a critical risk event in 2027 for certification. However, management anticipates certification by mid-2027, with first deliveries later that year.
Despite these challenges, Boeing forecasts reaching $10 billion in FCF by 2029. If achieved, and assuming a 20x FCF multiple, this could imply a share price of $252, representing an annual return of 14.4% to 2029.
The company maintains a substantial backlog of $745 billion, indicating future delivery opportunities if production targets are met.
