How Analysts Keep Chasing Boeing Higher and Higher in the Sky

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After reporting fourth-quarter and full-year 2017 results on Wednesday, Boeing Co. (NYSE: BA) stock posted a new 52-week high of $360.97, a jump of 2.5% from its previous high set two weeks earlier. Shares reached a new high again Thursday morning.

If nothing succeeds like success, then Boeing is doing wonderfully well. Not only that, the company’s 2018 guidance came in well above expectations.

Not only does the company say that 2018 will be another good year, but so do analysts who have checked in with updates to their price targets and ratings on the stock.

Here’s a look at some new ratings and comments on the company from several analysts.

Credit Suisse maintained an Outperform rating and raised its price target from $375 to $443. The analysts see earnings per share for this year at $14.02, nearly $2.00 per share more than Boeing’s own guidance. Credit Suisse comments:

[On our] “Blue Sky Scenario” Boeing … achieves its aspirational 15% margin target by 2020 (the firm currently projects about 13%) driving free cash flow to about $31 per share — for a blue sky valuation of $518. Credit Suisse’s “Grey Sky Scenario” would be if margins contracted to 11% in 2020, and that would put a valuation back down at closer to $233 in its stock price.

Merrill Lynch reiterated its Buy rating on Boeing stock and lifted its 12-month price objective from $395 to $470. The analysts commented:

The most important aspect of Boeing’s 2018 outlook, in our view, is the growth in the company’s expected FCF [free cash flow]. We increase our FCF to $12.8bn from $11.4bn in 2018e, to $12.9bn from $9.4bn in 2019e, and to $13.3bn from $10.4bn in 2020e. MERRILL LYNCH investment rationale says: Strong air traffic is bolstering demand for Boeing commercial aircraft, while a global upturn in defense spending is driving defense. As production rates of aircraft increase to unprecedented levels, the risk of oversupplying the market increases. However, Boeing’s ability to extract cash from its own business and deploy capital through share buybacks and dividends outweigh long-term cyclical headwinds at this point.

CFRA Research has a Buy rating on Boeing stock and raised its 12-month price target from $345 to $405, nearly 29 times earnings. The firm’s 2018 EPS estimate is $14.00, up from $11.77. The analysts commented:

Q4 adjusted EPS of $3.06 vs. $2.47 beat our $2.85 estimate on 9% revenue growth, which was better than expected. Backlog grew 3% from Q3 to $474 billion. BA is seeing growth across all three major business segments at better operating margins. The company is executing well, which we expect to persist. Strong demand, excellent execution, and accelerating EPS growth warrant premium valuation.

Other changes we spotted:

  • Canaccord Genuity raised price target from $290 to $345.
  • Berenberg reiterated its Buy rating and raised its target from $282 to $395.
  • RBC raised its price objective to $378 from $363.
  • Vertical Research maintained its Hold rating and boosted is target from $355 to $366

Boeing stock nearly doubled last year, rising 89.4%. In the first month of 2018, shares have added another 20%.