Morgan Stanley Cuts Boeing Price Target on Higher Execution Risks, Lists 5 Key Catalysts for 2022
2022.04.08 13:17
Morgan Stanley Cuts Boeing (BA) Price Target on Higher Execution Risks, Lists 5 Key Catalysts for 2022
Morgan Stanley analyst Kristine Liwag lowered the price target on Boeing (NYSE:BA) from $288.00 per share to $230.00 and recognizes that she was too optimistic with her previous estimates.
The lower price target reflects higher execution risk and the fact that some positive catalysts that were expected for April are now likely to materialize at a later stage. The delay is fueled mainly by the Boeing 737 NG accident in China.
Still, Liwag remains Overweight as he is bullish on the aerospace recovery post-COVID-19 and we do not expect the industry to revert back to global shutdowns. The analyst also expects BA to return to positive FCF in 2022, for the first time in 5 years.
“Despite some of these continued execution risks, we recognize that Boeing is emerging from the worst operating period of its history. Free cash flow is inflecting positive in 2022, the first year since 2018. Aircraft cancellations have significantly slowed down and aircraft orders have been gaining positive momentum. There is a visible backlog for the Boeing 737 MAX 8,” the MS analyst said in a client note.
Liwag also listed 5 catalysts to watch for 2022:
- The first revenue flight of the MAX in China, which will take place any day now;
- FAA approval of the 787 fixes;
- Chinas re-evaluation of its zero COVID-19 policy;
- the FAA certification of the 737 MAX 7; and
- the FAA certification of the 737 MAX 10 by year-end 2022.
“We note that if Boeing is unable to certify these aircraft by year end, the program would have to comply with the Aircraft Safety and Certification Reform Act, which could add significant time and resources,” Liwag concluded.
Boeing stock price closed at $177.97 yesterday.
By Senad Karaahmetovic
