Boeing stock to hit $240? One Wall Street analyst thinks so.

Boeing (NYSE: BA) we got more bad news this week. Its unresolved negotiations with the International Association of Machinists and Aeronautical Workers (IAM) threaten the company’s cash position and could lead it to raise funds or even resort to layoffs.

Despite the uncertainty, a UBS the analyst recently maintained a buy rating on the stock and a $240 target. Shares are currently trading around $155.

Boeing faces extended strike

Boeing reached a tentative agreement on a new contract with union representatives, but 95 percent of IAM members voted to reject the contract and 96 percent voted to strike. The company does not need a strike now. It ended the second quarter with $57.9 billion in consolidated debt and just $12.6 billion in cash.

Wall Street expects a cash outflow of $7.1 billion in 2024, leading to net debt of $46 billion at the end of 2024. Those figures exclude the impact of the strike, which some analysts estimate could cost Boeing as much as $1.5 billion in monthly cash.

It also comes at a crucial time when Boeing needs to increase production of the planes following production cuts this year.

Where next for Boeing?

The potential for near-term pressure on the stock is significant, a point the UBS analyst acknowledges. The buy case is based on the idea that once the problem is resolved, inventory will be de-risked and aircraft production will increase.

An extended strike and an improved contract agreement will cost cash, but management, equity investors, debt holders and IAM want the matter resolved as soon as possible.

One of the positives is that the company will undoubtedly have work for the IAM members as they have to deal with a number of years. As such, management can reach an agreement with IAM, assuming it will not be subject to cost increases, just when its workload is about to decrease.

This makes Boeing an interesting stock to monitor; if the dispute turns out to be short-lived and the cost increase is not too much of a waste of cash, it will have upside potential.

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Lee Samaha has no position in any of the shares mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Boeing stock to hit $240? One Wall Street analyst thinks so. was originally published by The Motley Fool