Boeing Co. shares fell sharply by 7% on Tuesday, September 3, 2024, outperforming Airbus, which fell by 4%.
The decline, according to a report published by Forbes, is attributed to a credit rating downgrade by one of the most prominent research firms on Wall Street, which highlighted the challenges facing Boeing in increasing production and delaying the achievement of cash flow targets.
Production problems
Boeing, according to Forbes, faces challenges in increasing the pace of aircraft production, which has led analysts to expect the company’s goal of achieving $10 billion in cash flows to be delayed for up to two years.
This delay may put significant pressure on the company’s financial performance in the near future.
In addition to the production challenges, Forbes’ analysis suggests that Boeing may need to raise about $30 billion in capital to develop new products.
This comes at a time when the company has more than $45 billion in debt, making raising this financing a major challenge in the current economic climate.
Revenue and Loss in 2024
Revenue reports for the first half of this year showed an 11% decline, with the company achieving sales of $33.4 billion compared to the same period last year.
Additionally, the company’s losses widened to $4.04 per share compared to $2.08 in the first half of 2023, reflecting a 5.3% deterioration in operating margins.
Future growth forecast
Despite these challenges, Boeing’s stock remains attractive from a valuation perspective. Analysts expect the company’s revenue to reach $76 billion in 2024, with a slow recovery expected in the coming years.
However, progress towards this growth may take longer than expected, as the company is likely to reach its target of producing 38 aircraft per month by the end of 2024, with the full increase in production to be achieved in 2025.
Boeing stock now faces greater challenges amid unstable economic conditions and increasing market pressures.
Despite these circumstances, some analysts continue to hold a positive assessment of the stock, which is around $160, and they believe that it could rise to $210 in the coming period, according to Forbes.
