There is a 'significant shift in sentiment' on Boeing stock says RBC and upgrades to buy
RBC Capital Markets analysts upgraded Boeing (NYSE:BA) shares to Outperform from Sector Perform with a price target raised to $275 per share from the prior $200.
Boeing stock rose nearly 2.3% on the news in early New York trading on Tuesday.
“We believe we are in the early stages of a significant shift in sentiment on BA stock,” the analysts wrote in their upgrade note.
Amidst a robust demand environment, RBC notes a favorable inclination among investors towards Boeing, given its exposure to the commercial aerospace cycle. The analysts remind investors that shares underperformed in the last 2 years amid the “limited pace of the FCF improvement.”
“However, we believe buy-side expectations for 2024-2025 FCF reflect conservatism, and as execution on the MAX and 787 continue to gradually improve, we believe the potential for positive revisions is growing,” the analysts added.
2024 delivery estimates provide “a relatively low bar” for Boeing, according to RBC’s analysis. The broker’s current modeling anticipates 535 737 deliveries in 2024. The analysts also expect the initial guidance for 2024 to fall within the range of 500 to 550 737 deliveries.
While being increasingly bullish on Boeing, RBC remains a bit cautious on FCF improvement with the firm’s 2025 estimate of $8.5 billion currently sitting below consensus.
“Within the commercial portfolio, we do continue to see risk associated with the 777X and timing of the entry into service (EIS),” the analysts concluded.
Boeing shares are up 15.1% year-to-date through Monday’s close.
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