Bank of America (NYSE:BAC)
Wednesday at Bank of America (NYSE:BAC), the price target for Boeing (NYSE:BA) was increased from $170 to $175, marking a 5% increase. The recent reevaluation of free cash flow multiples for the stocks comprising the S&P 500 is the basis for the higher objective set.
According to Bank of America (NYSE:BAC), which rates Boeing as Neutral, “Boeing (NYSE:BA) was once a darling brand in the A&D [aerospace and defense] sector, but it is now largely considered as a turnaround tale, a probable value play, or perhaps a value trap.”
After temporarily pausing production due to technical concerns, Boeing (NYSE:BA) has since restarted deliveries of the 787 Dreamliner, which is a significant contributor to the company’s free cash flow. The fuel economy of the aircraft made it possible for airlines worldwide to travel on shorter, more direct routes. The jet was a huge success.
Bank of America (NYSE:BAC) highlighted fourteen areas in which Boeing (NYSE:BA) might enhance its operations, one of which was a shift in the corporation’s culture to reemphasize the significance of engineering. According to the report, positive perceptions among investors could be improved by having an engineer serve as the company’s chief executive and having engineers serve on the board of directors or by having board members who are people who are “at least deeply informed” on the company’s end markets.
Ronald Epstein, an analyst at Bank of America (NYSE:BAC), quoted in the study, said, “The corporation needs to show to the world and the industry that it is an engineering powerhouse.” “Maintaining consistent levels of research and development is the cornerstone for producing industry-leading aircraft ahead of competitors and recruiting excellent people,”
The price target set by the bank is determined by assuming a short-term average of $15 in free cash flow per share and a relative discount of 0.7 times in comparison to the S&P 500.
During trading on Wednesday morning, Boeing (NYSE:BA) exhibited little to no movement. Since the beginning of the year, its price has decreased by 29%, much more than the S&P 500’s decline of 13%. (SP500).
Dhierin Bechai, a writer for Seeking Alpha, has assigned a Buy recommendation to shares of Boeing based on the expectation that there would be an increase in the number of aircraft deliveries in the longer term. According to the contributor JR Research, Boeing’s market value is now rated as a Hold.
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