Boeing price target raised by $5 to $175 at Bank of America

Sep. 07, 2022 10:39 AM ETThe Boeing Company (BA)SP500By: Rob Williams, SA NY4 Comments

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The price target for Boeing (NYSE:BA) was raised to $175 from $170 at Bank of America on Wednesday. The higher target is based on a recent rerating of free cash flow multiples for stocks that make up the S&P 500.

"Once a darling name in the A&D [aerospace and defense] world, BA is now widely seen as a turnaround story, a possible value play or a even a value trap," according to Bank of America, which rates Boeing as Neutral.

Boeing last month resumed deliveries of its 787 Dreamliner, a key source of free cash flow, after halting production because of technical issues. The jet is a hit product whose fuel efficiency gave airlines the ability to fly more direct routes worldwide.

Bank of America identified 14 areas of improvement for Boeing, including a change in company culture to reemphasize the importance of engineering. Having an engineer as a chief executive and a board that includes engineers -- or people who are "at least deeply informed" on the company's end markets -- would improve perceptions among investors, the report said.

"The company needs to demonstrate to the world and the industry that is an engineer powerhouse," Ronald Epstein, analyst at Bank of America, said in the report. "Consistent R&D levels are the foundation for developing market-leading aircraft ahead of competitors and attracting top talent."

The bank's price objective is based on a near-term average of $15 in free cash flow per share, and a relative discount to the S&P 500 of 0.7 times.

Boeing (BA) was little changed in trading on Wednesday morning. Its value has fallen 27% since the start of the year, compared with a 17% drop for the S&P 500 (SP500).

Seeking Alpha contributor Dhierin Bechai has a Buy rating on Boeing (BA) on the possibility for a longer-term improvement in aircraft deliveries. Contributor JR Research rates Boeing as a Hold on its market value.

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