Why Boeing Is Considering a Potential $10 Billion Stock Sale
Boeing is reportedly considering issuing stock to shore up its cash reserves. Here's what you need to know.
Boeing (BA) shares are trading higher Tuesday on news the embattled aerospace giant is considering issuing new stock. The move would raise at least $10 billion and would help BA replenish its cash reserves that have been depleted by an ongoing strike at its West Coast factories, according to media reports.
Boeing is working with advisers to explore its options, but any move to raise cash is not likely to happen for at least a month, according to Bloomberg, citing people familiar with the matter.
The company wants to reach an agreement to end the strike in order to gauge the total financial impact of that before moving forward. The walkout of Boeing's largest union, which is currently in its third week, is estimated to cost the company about $1.5 billion each month that it continues.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Boeing needs to boost its coffers in order to maintain its investment-grade rating, Bloomberg said. If the blue chip stock were to lose this rating, the cost to service its current $58 billion debt load would rise.
"The Boeing Company's investment-grade credit rating has limited headroom for a strike," Fitch Ratings said on September 13. "If the current strike lasts a week or two, it is unlikely to pressure the rating. However, an extended strike could have a meaningful operational and financial impact, increasing the risk of a downgrade."
A Boeing spokesperson declined Bloomberg's request to comment on the report.
Is Boeing stock a buy, sell or hold?
Even though Boeing is one of the worst Dow Jones stocks of the year, down 40% so far, Wall Street is bullish on the aerospace company.
According to S&P Global Market Intelligence, the average analyst target price for BA stock is $209.96, representing implied upside of about 38% to current levels. Additionally, the consensus recommendation is Buy.
Financial services firm Jefferies is one of the more bullish outfits on the large-cap stock with a Buy rating and $240 price target.
"The magnitude of the strike's impact on BA will be determined by its duration, which remains to be seen," said Jefferies analyst Sheila Kahyaoglu in a September 23 note. "We estimate the strike impact at $1.3 billion of free cash flow per month, which is mostly due to lost 737 deliveries and the corresponding cash payments (around $30 million per on average) coupled with overhead absorption."
Jefferies' $240 price target represents implied upside of 55% to current levels.
Related Content
-
The Paradox Between Money and Wealth: Finding the BalanceWealth reflects a life organized around relationships, health, contribution and time — qualities that compound differently than money in a mutual fund.
-
Billed 12 Hours for a Few Seconds of Work: AI and Law FirmsThe ability of AI to reduce the time required for certain legal tasks is exposing the legal profession's reliance on the billable hour.
-
General Partner Stakes: Why Investors Buy Into Private EquityGP stakes in asset management firms offer exposure to private markets and are no longer just for the wealthy. Find out why it looks like a good year to invest.
-
The Paradox Between Money and Wealth: How Do You Find the Balance?
Wealth reflects a life organized around relationships, health, contribution and time — qualities that compound differently than money in a mutual fund.
-
Billed 12 Hours for a Few Seconds of Work: How AI Is Helping Law Firms Overcharge Clients
The ability of AI to reduce the time required for certain legal tasks is exposing the legal profession's reliance on the billable hour.
-
General Partner Stakes: Why Investors Are Buying Into the Business of Private Equity
GP stakes in asset management firms offer exposure to private markets and are no longer just for the wealthy. Find out why it looks like a good year to invest.
-
Stocks Climb Wall of Worry to Hit New Highs: Stock Market TodayThe Trump administration's threats to Fed independence and bank profitability did little to stop the bulls on Monday.
-
How Worried Should Investors Be About a Jerome Powell Investigation?The Justice Department served subpoenas on the Fed about a project to remodel the central bank's historic buildings.
-
5 Golden Rules We (Re)learned in 2025 About InvestingSome investing rules are timeless, and 2025 provided plenty of evidence demonstrating why they're useful. Here's a reminder of what we (re)learned.
-
I'm a Financial Adviser: Here's How to Earn a Fistful of Interest on Your Cash in 2026 (Just Watch Out for the Taxes)Is your cash earning very little interest? With rates dropping below 4%, now is the time to lock in your cash strategy. Just watch out for the tax implications.
-
How Oil and Gas Investing Can Stabilize Returns and Shield Against Market Volatility: Tips From a Financial ProDirect exposure to oil and natural gas projects can strengthen a portfolio's long-term resilience with non-market-correlated cash flow and an inflation hedge.
