Boeing’s (BA) slower-than-expected delivery from production may be best for safety, but is “negative” for the stock and free cash flow generation, Morgan Stanley said in a note Wednesday.
On Tuesday, the planemaker said it delivered 83 commercial jetliners in Q1, the lowest since mid-2021.
Morgan Stanley said the slowdown amid scrutiny by the Federal Aviation Administration would make it hard for the company to meet production and free cash flow targets.
“Ultimately, the longer the FAA’s oversight pressures monthly aircraft deliveries on production, the more challenging it would be for Boeing to meet its 2025/2026 aircraft production and [$10 billion] free cash flow targets,” the firm said, adding that the company’s free cash outflow outlook is based on monthly production of 50 for Boeing 737 Max and 10 for Boeing 787.
Morgan Stanley cut Boeing’s price target to $180 from $235, but maintained the company’s equalweight rating because it continues to see “risk reward balanced at current levels.”