Bernstein analysts cut price target for Boeing, citing impact of ongoing strike

Investing.com -- Analysts at Bernstein have cut their price target for Boeing (NYSE:BA) shares to $195 from $207, citing the financial hit from a more than month-old work stoppage at the aerospace giant.

In a note to clients on Thursday, the analysts said the decision stemmed from the "strike impact, more cash pressure, and a likely equity raise, partially offset by a higher market multiple."

"Even at these share price levels, Boeing will need to execute to keep the upside," they added.

Boeing has been racing to shore up its finances during the strike by more than 30,000 of its employees in the US Pacific Northwest.

The labor action, which is leading to mounting expenses and placing Boeing's bond rating in jeopardy of slipping into junk territory, comes as the company already faces regulatory scrutiny and production delays following a dangerous mid-air door plug breach earlier in 2024.

Earlier this week, Boeing filed a registration statement with the US markets regulator that will allow it to raise up to $25 billion via a mixture of debt securities and other classes of stock.

In the filing, the embattled planemaker did not say when or exactly how much it will raise through the offering, although media reports have suggested that a share sale could come before the end of the year due to impending debt maturities.

Boeing has $11.5 billion in debt due to mature through Feb. 1, 2026. As of June 30, it had cash and cash equivalents of $10.89 billion.

"We may sell these securities on a continuous or delayed basis, directly, through agents, dealers or underwriters as designated from time to time, or through a combination of these methods," Boeing said in the filing.

Boeing announced it had secured a $10 billion credit line from banks including JPMorgan Chase (NYSE:JPM), Bank of America (NYSE:BAC), Citigroup and Goldman Sachs (NYSE:GS) as well.

Meanwhile, the group has said it will roll out job cuts amounting to 10% of its global headcount. Boeing will also delay the first deliveries of its 777X plane by a year and book $5 billion in losses in the third quarter.

Last week, Chief Executive Kelly Ortberg told employees that "tough decisions," including structural changes, will be needed to bolster the performance of the business and ensure its long-term competitiveness.

(Reuters contributed reporting.)

This article first appeared in Investing.com