Boeing (BA) gave free cash expectations well above Wall Street estimates on Wednesday’s Investor Day amid expectations of higher aircraft deliveries. BA stock rose, reclaiming a key level. But Boeing’s major suppliers have declined.
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In 2022, Boeing expects to generate between $1.5 billion and $2 billion in free cash flow (FCF), management told investors Wednesday. Wall Street had been forecasting an FCF of $670.3 million for the full year. The aircraft manufacturer now expects $3 billion to $5 billion in FCF in 2023 with increased deliveries of the 737 and 787. By 2025-26, Boeing expects $10 billion in jaw-dropping and $100 billion in revenue.
FactSet showed that Boeing’s FCF peaked at $13.6 billion in 2018, followed by three years of burning cash.
Aerospace and defense giant Dow Jones said Wednesday it expects to deliver about 375 of its best-selling 737 aircraft in 2022, rising to 400-450 next year. By 2025-26, Boeing expects about 800 commercial deliveries, including the 737 and 787 Dreamliner. The company said earlier in October that since the beginning of the year, Boeing has delivered 277 units of the 737 and nine units of the 787.
Boeing’s best seller 737 Max returned to service in December 2020 After two fatal trips that brought the business to a halt around the world. Deliveries of the 787 resumed in the fourth quarter after manufacturing issues. Aircraft makers receive the bulk of payments from airlines and other customers after aircraft are delivered.
Previously, on October 26, only aerospace and defense giant Dow Jones said it still expects Back to positive free cash flow This year, customers also love Alaska Air Group (ALK) ordered more than 737 aircraft. Management uses free cash flow as a metric to assess business performance and overall liquidity.
On October 26, Boeing also Recorded a sudden loss for the third quarterwith challenges in the defense sector to offset the gains of commercial aviation.
For the full year, Wall Street analysts now expect a net loss of $6.39 per share. They expect Boeing’s annual earnings to return in 2023, after four years of losses.
Ahead of Wednesday’s event, many investors were hoping for details about production and delivery targets for the best-selling 737 Max, which brings Boeing profits and free cash flow, as well as its older brother, the 787.
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Boeing shares rose 2.7% to 147.31 amid a broad-based decline in stock market today. BA stock regained its 50-day scaling streak but closed off its session highs. BA stock tumbled October 26, down nearly 9% on a large third-quarter profit loss. Boeing shares are now back near their October 26 highs.
Competitor maker Airbus (EADSY) 2.2% Wednesday. Major Boeing suppliers General Electric (GE) And the Soul Aeronautical Systems (SP) fell 0.9% and 0.5%, respectively, to close near session lows.
Spirit AeroSystems supplies the fuselage for the 737 Max. A GE joint venture provides engines for the aircraft.
BA stock has a bottom base at 173.95 buy point.
Boeing forecast
Boeing has suffered a meltdown in commercial and commercial air travel during the pandemic. It has also faced setbacks in major defense programs.
The company is turning around as recession fears and supply disruptions persist.
“While many investors are focused on what the Boeing Guidebook will be, we are looking at more,” Ronald Epstein, BofA Global Research analyst, wrote in a note to clients Tuesday, ahead of the event.
The analyst added: “If we see anything close to peak company valuation again, meaningful change should take hold throughout the company. We are looking at how the BA seeks to change the culture while balancing investments, supply problems, inflation and de-leveraging. From the balance sheet.” Epstein maintained a neutral rating on Boeing stock with a target price of $165.
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