UBS Upgrades Boeing (BA) to Buy; Out-Year FCF Estimates Move Materially Higher

(Updated - December 7, 2020 5:29 AM EST)

(updating comment)

UBS analyst Myles Walton upgraded Boeing (NYSE: BA) from Neutral to Buy with a price target of $300.00 (from $150.00), saying FCF estimates have moved up materially on narrowbody/cost action optimism.

"We upgrade BA to Buy as our out-year FCF ests have moved materially higher as we see advances coming back faster with 50/mo+ on the 737 in '25 coupled with costs actions across the enterprise more than offsetting lower WB production (i.e. another 787 rate cut just announced)," Walton commented.

"Our concern on BA’s balance sheet restoration through greater equity issuance is mitigated at current higher share price (we aren't modeling in any additional equity raise at this time)," it was added.

"Vaccine efficacy of 95% was the catalyzing event for the restart of the aero cycle and history suggests that when the aero cycle works, so does BA. With history as a guide, even after the last few week's move, BA is following the same path out of the market bottom as it did in '09, yet unlike '09 it has only recovered ~70% of its 3mo pre-market bottom or about half prior recoveries. The stock retains its lowest sell-side rating in a decade and positive catalysts ahead include travel restriction relaxation and MAX certification in China (also widebody orders in 1Q21?)."

For an analyst ratings summary and ratings history on Boeing click here. For more ratings news on Boeing click here.

Shares of Boeing closed at $232.71 yesterday.

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