Boeing (BA) posted “strong” Q4 results backed by its free cash flow and “positive” commercial airplane operating margins, but the focus is now on inventory draw-down and supply chain stability, RBC Capital Markets said in a note to clients emailed Thursday.
“The story for 2024 is about inventory liquidation as the FAA keeps a lid on near-term MAX production increases,” said RBC analysts Ken Herbert and Stephen Strackhouse.
The investment firm kept the company’s outperform rating and cut the price target to $260 from $285.
For its Q4, Boeing posted a narrower core loss of $0.47 per share from its $1.75 per-share loss a year earlier. Analysts surveyed by Capital IQ expected a core loss of $0.79 per share. Revenue for the quarter increased to $22.02 billion from $19.98 billion a year earlier. Analysts expected $21.08 billion.
While Boeing has “withheld providing detailed 2024 guidance,” it indicated that the $4.4 billion “in 2023 FCF represents what could be the low end of the 2024 outlook,” RBC said.
“The supply chain remains a gating factor to higher production rates,” the analysts said. “We currently estimate that the [Federal Aviation Administration] limit on Max production increases will last at least into 2Q24.”