Why Boeing is considering a $10 billion stock sale

Vaseline2 weeks ago

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Why Boeing is considering a billion stock sale

Boeing Shares ( BA ) are trading higher on Tuesday on news that the embattled aerospace giant is considering issuing new shares. The move would raise at least $10 billion and help BA replenish cash reserves that have been depleted by an ongoing strike at its West Coast factories, according to media reports.

Boeing is working with advisers to explore its options, but any move to raise cash will not happen for at least a month, according to Bloomberg, citing people familiar with the matter.

The company wants to reach an agreement to end the strike to assess its full financial impact before moving forward. The walkout by Boeing’s largest union, now in its third week, will cost the company about $1.5 billion each month it continues.

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Boeing needs to shore up its coffers to maintain its investment grade rating, Bloomberg said. If the blue chip stock were to lose that rating, the cost of servicing its current $58 billion in debt would increase.

“Boeing’s investment grade credit rating has limited room for a strike,” Fitch Ratings said on September 13. “If the current strike lasts a week or two, it is unlikely to put pressure on the rating. However, a prolonged strike could have a significant operational and financial impact, increasing the risk of relegation.”

A Boeing spokesman declined Bloomberg’s request for comment on the report.

Is Boeing stock a buy, sell or hold?

Even though Boeing is one of the worst Dow Jones stocks of the year, down 40% year to date, Wall Street is bullish on the aerospace company.

Conformable S&P Global Market Intelligencethe average analyst price target for BA stock is $209.96, representing an implied upside of about 38% from current levels. Furthermore, the consensus recommendation is Buy.

Financial services firm Jefferies is one of the most bullish on large-cap stocks, with a buy rating and a $240 price target.

“The extent of the strike’s impact on BA will be determined by its duration, which remains to be seen,” Jefferies analyst Sheila Kahyaoglu said in a Sept. 23 note. “We estimate the impact of the strike at $1.3 billion in free cash flow per month, which is largely due to the loss of 737 deliveries and corresponding cash payments (approximately $30 million each), along with the absorption of overhead “.

Jefferies’ $240 price target represents an implied upside of 55% from current levels.

Vaseline2 weeks ago

0 2 minutes read

Vaseline

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