Seaport Global Securities analyst Richard Safran reiterated a Buy rating and $207.00 price target on Boeing (NYSE: BA).

The analyst comments "New CEO Kelly Ortberg is in his first week at BA. Already announced is that he will be headquartered in Seattle and proximate to commercial production. His current activities are mostly facility visits and getting the lay of the land. He's met with some of BA's largest customers as well as representatives of the IAM union (which we'll discuss again below). BA made clear that Kelly's priority is to rebuild relationships and trust with stakeholders. Narrowbody production. BA notes an improved relationship with the FAA (critical as BA needs to regain credibility with the FAA to move MAX rates above 38/mo). BA made it clear that higher narrowbody rates, above 38/mo, are predicated on achieving stable performance with KPI (Key Performance Indicators) outlined in the 90-day plan BA submitted to the FAA. BA notes the plan has been fully implemented. BA reiterated it still expects to achieve 38/mo by year-end on three production lines; 15/mo on the west line, 15/mo on central line, and 8/mo on east line which was recently activated and is being ramped up. Did BA talk down MAX rates? No, not really, in our view. SPR only delivered 27 fuselages in 2Q24. BA made it clear that SPR has come short of its MAX delivery objective. SPR has about 50 fuselages in buffer and is currently at 31/mo. BA noted, however, that the inventory buffer of MAX fuselages allows for higher rates (above 31/ mo) and a gradual increase to 38/mo by year end. Stated differently, SPR's ability to lag BA production is due to a large work in process inventory on hand. BA did note a supplier non-conformance issue that had a relatively minor impact in August. In the end, BA noted no change to 38/mo rate ramp. The only concern was that BA did note that LEAP engines are a watch item for rates above 38/mo. In general, however, the supply chain is in good position to support a gradual production ramp to 38/mo. SPR. BA mentioned a mid-2025 closure for Airbus' portion of SPR (with several milestones in between). BA couldn't comment much, but it did note that there hasn't been a major objection from SPR customers (other than BA). Once integrated into BA, SPR will be run as it was before it was sold to Onex. BA notes it has optionality funding the SPR acquisition. BA noted the balance sheet priority will be to maintain investment grade and allow the supply chain to reset. According to BA, ratings agencies focus on production and cash generation as well as absolute debt reduction. BA didn't give a lot of specifics on the potential for new equity. BA noted a number of options for finance. BA also noted that ratings agencies supported supply chain investments despite the negative cash flow impact. Defense. BA did not directly address the question regarding the DoJ settlement; would that exclude BA from being awarded upcoming Defense programs. Understandable considering the first commandment in A&D is; "thou shalt not get out in front of thy customer". In our view, and based on history, while it's possible the Pentagon could suspend BA from bidding on new contracts, the suspension is not likely to be for long, and any major contracts that BA is bidding on are likely to be delayed until after the suspension is lifted (in our view)."

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Shares of Boeing closed at $172.76 yesterday.