The last "bear" rejected the advice to sell Boeing stock. What changed his mind?

The only analyst who had previously advised selling shares of Boeing, the aircraft manufacturer, has raised his rating by two notches: he now recommends buying the stock. BNP Paribas estimates that the company’s stock could more than double in value by 2030. Boeing shares jumped 8% during trading on Monday, August 3—partly due to the long-awaited certification of the aircraft.

BNP Paribas analyst Matthew Eckers has upgraded his recommendation on Boeing shares from “Underperform” to “Outperform,” according to Bloomberg. Eckers was the last “bear” on the aircraft manufacturer’s stock: now there are no sell recommendations left for the stock.

Furthermore, BNP raised its price target for Boeing shares to $300, making it the highest forecast among analysts tracked by Bloomberg. Baird analyst Peter Arment set the same price target. It implies a 28% increase from the closing price on August 3. On that day, the stock jumped 8% to $233.49. Year-to-date, the stock is up 7.5%. By comparison, the S&P 500 index has gained 11% over the same period.

Now, more than 80% of the analysts tracked by Bloomberg recommend buying shares of the aircraft manufacturer, while the rest recommend holding the stock.

Market forecasts for Boeing’s free cash flow have been revised downward “too sharply,” and over the course of the next year, investment risks associated with Boeing will decrease significantly thanks to the completion of certification for new aircraft and a reduction in debt, according to Eckers. On Monday, the company announced that it had received regulatory certification for the Boeing 737 Max 7—the smallest model in the company’s most sought-after lineup.

“The era of uncertainty for Boeing that began after the pandemic is over,” Eckers wrote in a note to clients, as quoted by Bloomberg. “The new certainty will likely allow the stock to break out of the $150–250 range, where it has remained since early 2020.”

According to Ekkers, obtaining certifications for certain variants of the 737 Max and 777 families over the next year will enhance the company’s operational stability. In addition, the analyst expects that Boeing’s net debt burden will return to near-pre-pandemic levels as early as next year.

The analyst also believes that the impact of one-time expenses from the defense division will subside significantly, which will ease pressure on cash flow and allow investors to refocus on the accelerating growth of the commercial aircraft business. Eckers raised his forecast for Boeing’s free cash flow in 2027 to $7 billion. By comparison, the average analyst estimate compiled by Bloomberg is $6.23 billion.

"As the main factors putting pressure on cash flow, — development costs, customer compensation, and accumulated expenses in the defense division — begin to ease, we expect free cash flow to reach approximately $16 billion by 2030,” the analyst wrote. Applying the current free-cash-flow yield for industrial companies and Boeing’s historical discount, “this corresponds to a share price of about $450—roughly double the current level,” Eckers asserts.

This article was AI-translated and verified by a human editor