Citi analysts said in a note Monday that Boeing’s (NYSE:BA) ongoing labor negotiations may be one of the final hurdles the company must overcome before news becomes more positive.
“Boeing has had a tough go of it since 2019. Crashes, a pandemic and subsequent thinning of an experienced workforce, poorly priced defense programs, a door blow-out followed by increased regulatory oversight, a guilty plea, stranded astronauts, and now a strike,” wrote the bank.
However, Citi remains optimistic, stating it’s “always darkest before the dawn.”
Citi’s analysts believe the current labor strike, while disruptive, is unlikely to be prolonged.
“We don’t expect this to be a long, drawn-out process given the economic incentives on both sides,” Citi noted. Once resolved, Boeing is expected to move past these hurdles and into a more favorable news cycle.
Despite the challenges, Citi maintains its Buy rating on Boeing with a price target of $224. They highlight Boeing’s strong positioning in the commercial aerospace market, where demand extends well into the 2030s, as well as robust defense demand driven by geopolitical factors.
The long-term visibility, combined with improving execution, is seen as offering significant opportunities for the company and its investors.
Citi views the labor strike as a temporary disruption akin to the supply chain issues that have plagued the industry in recent years.
As these issues are resolved, analysts believe the focus will likely shift to improving productivity, clearing inventory, generating cash, and reducing debt.
The bank stated, “We don’t think the company’s business model is structurally impaired or different than it was prior to 2019.”
With a new CEO and management team committed to overcoming these challenges, analysts believe Boeing is poised to see better days ahead as it navigates the final obstacles in its recovery journey.
