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Boeing (NYSE:BA) on Tuesday was downgraded to Equal weight from an investment rating of Overweight by analysts at Morgan Stanley. They said the plane maker’s stock is approaching fair value after rallying in the fourth quarter of last year.
Boeing slipped 1.2% to $206.42 a share by 10:17 a.m. ET Tuesday, narrowing a premarket decline.
Boeing’s (BA) stock currently trades at a multiple of about 14 times Morgan Stanley’s estimate for 2025 free cash flow per share, compared with a historical average of 13 times to 14 times from 2012 to 2019.
“Going forward, we expect Boeing (BA) to trade on execution of its 2025/2026 aircraft production rate targets and free cash flow generation,” Kristine T. Liwag, analyst at Morgan Stanley, said in a January 10 report. “Despite the strong demand for aircraft, we see the supply chain as a bottleneck for further production / delivery increases, which is the key milestone for cash generation.”
Morgan Stanley raised its price target for Boeing (BA) to $220 a share from $213 a share, based on a higher multiple of about 16.3 times estimated free cash flow per share for 2024, up from about 15.8 times previously.
“Boeing’s (BA) valuation on a free cash flow basis typically peaks in anticipation of a significant improvement in free cash flow,” according to Morgan Stanley.
Boeing (BA) gained more than 57% during Q4, narrowing its 2022 decline to about 8.4%, compared with an 18% loss for the Standard & Poor’s 500 index (SP500).
Source: news.google.com
