BofA Securities cuts Boeing price target; sees reputational risks

Investing.com - BofA Securities has cut its 12-month target price on Boeing (NYSE:BA), saying the aircraft manufacturer is facing reputational and operational risks, but demand remains robust long term.

BofA Securities, the investment banking division of Bank of America, hosted Brian West, Boeing’s CFO, at a conference on Wednesday, looking for insight into the near-term impact of the ongoing 737 developments into production, deliveries and free cashflow. 

As a result BofA cut its price objective to $210 from $225, keeping its ‘neutral’ rating.

At 09:50 ET (1350 GMT), Boeing stock traded 0.2% higher at $188.21, down almost 30% year-to-date.

“We think that financial targets will necessarily need to take a seat further back to compliance, safety, and quality assurance,” analysts at the bank said, in a note dated March 21.

“We lower our FCF estimates to reflect operational and customer penalties from a delayed and highly scrutinized 737 production ramp up.”

Boeing’s latest problem occurred in January when a cabin panel blowout forced an Alaska Airlines flight to make an emergency landing.

U.S. regulators briefly grounded certain planes for safety checks, a move less severe than the grounding of all MAX-family jets worldwide nearly five years ago following a pair of fatal crashes.

That said, BofA noted that the civil aviation market remained strong, and Boeing was a key player in the sector.