Bernstein SocGen cuts Boeing stock price target on delivery delays

Bernstein SocGen has reduced its price target for Boeing Co. from $298 to $278 while preserving an Outperform rating. The firm is concerned about delivery delays that will slow down the 2026 and 2027 production estimates. To account for these delays, Bernstein SocGen has adjusted its pricing assumptions, lowering the expected compensation costs affecting the 737 but increasing them for the 787.

Despite being flat for three years, Boeing's share price has struggled to keep pace with the S&P 500, which has risen 80% during the same period. Since 2018, Boeing has faced numerous challenges, including accidents with the 737 MAX, structural issues with the 787, certification delays, and defense charges. These setbacks have brought the gross profit margin down to 4.71% in the most recent year.

The firm's CEO, Kelly Ortberg, has been spearheading recovery efforts since August 2024. While there have been improvements in key programs within Boeing's commercial and defense divisions, persistent issues in labor, certifications, and production processes continue to hinder progress. The firm has also raised its defense growth outlook following Boeing's win on the F/A-XX program, though specific details remain scarce.

Analysts expect more clarity on free cash flow growth in the upcoming third-quarter report. Additionally, Avolon has placed a substantial order for 250 aircraft from both Boeing and Airbus, with the option to purchase an extra 100 planes from Airbus, which includes 140 Boeing 737 MAXs, 75 Airbus A320neos, and 35 A330neos. The aerospace industry has witnessed increased analyst activity, with Baird reinstating an Outperform rating for Boeing, highlighting delivery momentum as a critical factor.

Baird reported that Boeing delivered about 56 commercial aircraft in September, contributing to a total of around 160 aircraft for the third quarter.