When Boeing Co. (NYSE: BA) reported fourth-quarter and full-year results on Wednesday, the company particularly noted that it had met its cash flow projections for 2016 and that quarterly revenues and earnings beat consensus estimates. The company also noted that it expected deliveries of commercial jets to rise from 748 to between 760 and 765 in 2017.
The company’s 2017 revenue forecast calls for $62.5 billion to $63.5 billion, down from just over $65 billion in 2016, but that didn’t really slow down the bulls. Boeing added $250 million to its 2016 cash flow of $10.5 billion to raise the estimated cash flow for 2017 to $10.75 billion.
Analysts were divided on the firm’s prospects for the coming year, with some maintaining Buy ratings and others sticking with Sell ratings. All seem to agree, however, that the stock’s price target should be increased. Here’s our own view of the bullish/bearish outlook for Boeing in 2017.
Merrill Lynch likes the company’s cash flow story, but maintained its Sell rating and $135 price objective based on the downturn in commercial jet orders:
Boeing is changing the face of commercial aerospace with the 787. We firmly believe that the use of composites as the primary structure on the 787 marks a fundamental shift in the industry. We expect the stock to be pressured in the medium term as Boeing grapples with industry concerns regarding overproduction as well as development and production risks on programs like the 787, 777X, and 737MAX.
Analysts at Jefferies took a more bullish stance, raising their price target from $185 to $200 with a Buy rating:
Despite a $0.32 charge for further cost growth on the KC-46, BA delivered good overall operating performance in Q4:2016. EPS was $2.47 vs. our $2.39 estimate. Full year-results were $7.24. Our Core EPS estimate is unchanged at $9.25 for 2017 and $10.00 for 2018. Operating Cash Flow grew to $10.5bb from $9.4bb and is projected to reach $10.75bb in 2017, with an increase likely in 2018. FCF could be in the range of $14 per share in 2017.
Boeing CEO Dennis Muilenburg has apparently smoothed over the controversy with President Donald Trump related to Boeing’s contract build two new jets for the Air Force One fleet. Muilenburg is also upbeat on Trump’s comments on raising U.S. Air Force budgets.
The stock closed Friday at $167.70, down about 0.8% for the day, in a 52-week range of $102.10 to $170.00. That high was recorded Thursday. The stock’s 12-month consensus price target is $168.75. Since the beginning of the year, Boeing stock is up 7.72%.
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