Boeing (BA) price target lifted at Jefferies as Q4 MAX deliveries 'point to 2023 acceleration'

Jefferies analyst Sheila Kahyaoglu raised the firm's price target on Boeing (NYSE: BA) to $250 per share from $240, maintaining a Buy rating on the stock.

The analyst cited Boeing's Q4 results, highlighted by its positive FCF, as one reason for the price target lift. However, Kahyaoglu acknowledged that commercial profitability remains elusive.

The analyst added that the key is increasing production supporting deliveries, which rise to 561 and 713 in 2023 and 2024, up from 480 in 2022, which supports FCF increasing to $3.7BB and $7.2BB in 2023 and 2024, respectively.

"BA can generate FCF of $3.7BB (guidance of $3-5BB), up from the $2.3BB in 2022. This is underscored by our revenue est of $81BB (down from $83.8BB prior on BCA elims/concessions and prior defense charges), which advances 22% y-o-y," writes Kahyaoglu. "Given higher Unallocated/R&D we pare back our 2023 EPS est to $2.60 from $3.35. The bridge to 2024 is predicated on LSD Defense growth coupled w/ 713 aircraft deliveries in 2024, up from 561 in 2023 supporting 14% revenue growth and driving EPS of $7.05 in 2024."

Furthermore, the analyst states that fourth-quarter MAX deliveries point to 2023 acceleration.

"737 MAX production continues to operate below the stated 31/mo rate in Q4, w/ 107 MAX deliveries and a 20 aircraft decline in inventory implying
87 produced in Q4, or 29/mo," explains Kahyaoglu.

"We est BA delivers 410 MAXs in 2023, up from the 374 in 2022. BA expects inventory winddown to slow in 2023 given the remaining 250 aircraft include 138 for China and 30 MAX 7/MAX 10. We assume 31/mo output is reached in H2 w/ production of 348 aircraft implying 62 aircraft out of inventory in 2023 (vs. 85 in 2022) ending 2023 at 188 aircraft w/ a further decline to 80 in 2024."

By Sam Boughedda

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