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Boeing Stock: Bull vs. Bear; 2 Wall Street Analysts Battle It Out
BABoeing(BA) The Motley Fool·2025-03-26 22:47

Core Viewpoint - Boeing has become a contentious topic among investors, with analysts holding starkly different views on the stock's future performance, as evidenced by contrasting ratings and price targets from Wells Fargo and Citi [1] Bearish Perspective - The Wells Fargo analyst argues that Boeing is far from achieving its 2025 investor day outlook of 10billioninfreecashflow(FCF),withaconsensusforecastpredictinganoutflowof10 billion in free cash flow (FCF), with a consensus forecast predicting an outflow of 4.9 billion in 2025, followed by a mere 5.7billioninFCFgeneration[2]−ThedifferencebetweentotalFCFandFCFpershareissignificant;withasharecountincreasetoapproximately739.3million,theprojectedFCFpersharewouldonlybe5.7 billion in FCF generation [2] - The difference between total FCF and FCF per share is significant; with a share count increase to approximately 739.3 million, the projected FCF per share would only be 7.7 billion in 2026, far below the earlier estimate of 16.66 per share [3][4] - Production issues, including quality control and supply chain disruptions, have led to a reduced production target of 38 planes per month for the 737 MAX by 2025, down from the previously expected 50 planes [5] - The defense segment, Boeing Defense, Space & Security (BDS), is also underperforming, with expectations of breakeven cash flow pushed to 2026 or 2027 due to ongoing charges and delays [6] - The analyst from Wells Fargo believes Boeing will fall short of the Wall Street consensus for FCF of about 9 billion in 2027 by at least 1billion,justifyingasellrecommendation[7]BullishPerspective−Conversely,aCitianalysthighlightsBoeing′slong−termpotential,suggestingthatmuchofthenegativenewsisalreadyreflectedinthestockprice,andevenmodestFCFgenerationcouldleadtosignificantshareappreciation[8]−Thecommercialaerospacemarketoutlookremainspositive,withBoeingandAirbusmaintainingmultiyearbacklogsandairlinesshowingconsistentdemandfornewaircraft[9]−AhypotheticalscenariowhereBoeingachieves1 billion, justifying a sell recommendation [7] Bullish Perspective - Conversely, a Citi analyst highlights Boeing's long-term potential, suggesting that much of the negative news is already reflected in the stock price, and even modest FCF generation could lead to significant share appreciation [8] - The commercial aerospace market outlook remains positive, with Boeing and Airbus maintaining multiyear backlogs and airlines showing consistent demand for new aircraft [9] - A hypothetical scenario where Boeing achieves 7 billion in FCF in 2027 would result in a market cap trading at 18 times FCF, which is favorable for a company expected to grow as production ramps up [10] Investment Strategy - The current market conditions suggest a cautious approach, with the bearish perspective potentially being overly focused on past performance, while the bullish view relies on long-term assumptions that may be difficult to trust given Boeing's recent operational challenges [11][12] - A prudent strategy may involve monitoring Boeing's progress on key objectives, such as increasing 737 MAX deliveries and returning the BDS segment to profitability [13]