Boeing Stock (NYSE:BA)
On Tuesday, investment analysts at Morgan Stanley lowered their recommendation for Boeing (NYSE:BA) to Equal weight from their previous recommendation of Overweight. After a strong performance in the last three months of 2018, analysts believe the stock of the aircraft manufacturer is getting closer to being fairly valued.
Tuesday morning at 9:27 a.m. Eastern Time, Boeing stock fell by 2.4% to reach a price of $203.55 before the market opened.
The price of BA stock is now trading at a multiple that is around 14 times Morgan Stanley’s forecast for free cash flow per share in 2025. This is comparable to a historical average that ranges from 13 times to 14 times during the years 2012 to 2019.
According to a report published on January 10, an analyst at Morgan Stanley named Kristine T. Liwag said that going ahead, the firm anticipates that Boeing would trade on the execution of its 2025/2026 aircraft production rate objectives as well as the creation of free cash flow. “Despite the robust demand for airplanes, we believe the supply chain will be a barrier to additional production and delivery increases. This is the crucial milestone for cash creation.”
Based on a higher multiple of about 16.3 times the anticipated free cash flow per share for 2024, up from approximately 15.8 times before, Morgan Stanley increased its price objective for Boeing stock to $220 per share from $213 per share.
According to Morgan Stanley, “Boeing’s value on a free cash flow basis often peaks in expectation of a major increase in free cash flow.” This information comes from the company’s research.
Boeing increased its value by more than 57% during the fourth quarter, bringing overall 2022 fall down to around 8.4%. This is in contrast to the loss of 18% that the Standard & Poor’s 500 index (SP500)experienced during the same period.
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