Bernstein Lowers Price Target for Boeing – Impact of Ongoing Strike in Focus

Bernstein analysts have lowered their price target for Boeing from a previous $207 to $195. The background is the financial strain the aerospace company is experiencing due to a labor dispute that has been ongoing for over a month. In a communication to clients, the analysts explained that the reduction in the price target is due to the "impact of the strike, increased liquidity pressure, and a potential capital increase," which could, however, be partially offset by a higher market multiple. Despite the current stock valuation, Boeing will be challenged to realize the anticipated upside potential, the analysts added. The work stoppage by over 30,000 employees in the U.S. Pacific Northwest is meanwhile leading to rising costs and threatening Boeing’s creditworthiness, which is in danger of slipping into the junk category. Previously, the company faced regulatory scrutiny and production delays, especially following an incident with an aircraft door at the beginning of 2024. Earlier discussions between Boeing and the U.S. Securities and Exchange Commission have received the green light for potentially raising up to $25 billion through bonds and other securities. While specific timing or volume details are still pending, media outlets speculate about a forthcoming stock sale before the end of the year, also in consideration of expiring debt. By February 2026, Boeing faces maturities amounting to $11.5 billion. As of June 30th this year, the company held liquid assets of just under $10.89 billion. Boeing also announced that the securities would be sold "continuously or intermittently, directly, through agents, dealers, or underwriters, or by any combination of these methods," the company said in the release. The aircraft manufacturer also secured a $10 billion credit line from banks such as JPMorgan Chase, Bank of America, Citigroup, and Goldman Sachs. Furthermore, Boeing will reduce 10% of its worldwide positions, delay the first delivery of the 777X model by a year, and book losses amounting to $5 billion in the third quarter. CEO Kelly Ortberg emphasized to employees last week that "hard decisions," including structural changes, are necessary to improve the company's performance and ensure its long-term competitiveness.