Bernstein downgrades Boeing as labor strike weighs on outlook
The situation keeps getting worse, according to Bernstein. The firm downgraded the plane maker to market perform from outperform. Analyst Douglas Harned also lowering his price target to $169 from $195. The updated forecast implies a gain of 10% from Tuesday’s close. Shares of Boeing have slipped 41% this year, weighed down by a slew of headwinds including quality control issues and, most recently, a machinists strike. The strike began last month and was prolonged last week after the union rejected Boeing’s latest labor proposal . BA YTD mountain Boeing YTD chart Harned expressed his doubt that Boeing would be able to pull off a recovery in the short term. “While Boeing should eventually recover to its long-held industry position, we are more skeptical on when it will happen,” the analyst wrote. “After Q3, we lack confidence that Boeing shares can outperform the market in the next 12 months.” Boeing’s turnover — particularly at the executive level — continues to erode the company’s recovery plan, Bernstein said. While new CEO Kelly Ortberg has stressed the need for business stabilization and cultural change, he cannot execute these plans alone. “Boeing has lost experienced leaders at all levels. We need to see specifics on the plan for recovery and rebuilding leadership talent,” Harned added. The strike has also worsened Boeing’s free cash flow outlook, which is now “materially worse” than Harned’s prior estimates. The analyst sees about $4 billion in negative free cash flow for the fourth quarter and about $5 billion in negative free cash flow for 2025. “Cash hits from inventories and advances should reverse in 2026/27. But, this requires more confidence than we have,” the analyst said. “It is critical to get 737MAX production up with quality, raise slow widebody deliveries, get certifications done, integrate Spirit and bound (eventually fix) losses in defense. We need clarity on the path to get there.”
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