Boeing’s $10 Billion Cash Flow Target Delayed, Wells Fargo Downgrades Stock

Wells Fargo has announced a downgrade of Boeing’s stock to “underweight,” forecasting a significant delay in the aerospace giant’s goal to achieve an annual free cash flow of $10 billion. Originally projected for 2025-2026, this target is now expected to be reached around 2027-28. Following this news, Boeing’s shares dropped more than 7%, hitting a one-and-a-half-year low.

The downgrade was influenced by Boeing’s current financial health, with approximately $45 billion in net debt, which Wells Fargo analyst Matthew Akers noted must be addressed before the company can initiate the development of a new aircraft. Akers also highlighted that reducing this debt would likely consume all of Boeing’s cash flow through 2030.

Amidst ongoing recovery efforts from a crisis triggered by a mid-air accident in January, which resulted in regulatory restrictions on its 737 MAX production, Boeing’s financial strategies are under scrutiny. The pressures have intensified the need for Boeing to strengthen its balance sheet sooner, especially with a potential new aircraft launch anticipated in the coming years.

Wells Fargo estimates that Boeing will need to raise about $30 billion in equity to eliminate its net debt by 2027. Boeing’s CFO Brian West emphasized in a July earnings call that the company intends to manage its finances prudently and will ensure sufficient liquidity as necessary.

This strategic shift in Boeing’s financial planning may slow down its competition with Airbus, posing long-term market share risks if the company opts to delay new aircraft development to focus on debt reduction.