Boeing stock target cut at Jefferies as 777X certification falls behind schedule

Jefferies has cut its price target on Boeing (BA) to $255 from $275, citing further delays in the 777X certification process, which is now expected to push first deliveries into 2027. This setback is projected to incur a non-cash charge of up to $4 billion in Q3 and a $2 billion free cash flow hit in 2026, leading to significantly reduced FCF forecasts for 2025-2027. Despite the program's accumulated charges exceeding $10 billion, Jefferies maintains a long-term outlook for FCF to climb towards $10.6 billion by 2028 as deliveries eventually ramp up.

Analysis

Jefferies has reduced its price target for Boeing (BA) to $255 from $275, directly attributing the cut to further delays in the 777X certification program, which now risks pushing the first delivery into 2027. This latest setback is expected to have a substantial financial impact, with Jefferies estimating a potential new non-cash charge of up to $4 billion in the third quarter and a $2 billion hit to free cash flow (FCF) in 2026 if planned deliveries are deferred. This adds to a troubled history for the 777X, which has already accumulated over $10 billion in charges since its original 2020 service entry target. Consequently, Jefferies has materially lowered its FCF forecasts, now projecting a $2.6 billion outflow for 2025 and reducing its 2026 FCF estimate to $3.5 billion from $5.5 billion. Despite these significant near-term headwinds and a clear pattern of execution issues, the long-term thesis remains anchored to a strong backlog of 565 jets. The analyst model still projects a substantial FCF recovery, climbing to $10.6 billion in 2028 and $13 billion in 2029 as production is expected to ramp significantly.

Key Decisions for Investors

• Investors should anticipate near-term stock volatility and balance sheet pressure due to the projected $4 billion Q3 charge and a revised 2025 free cash flow outflow of $2.6 billion.
• The investment thesis is increasingly a long-term recovery play dependent on future execution; while the 565-jet backlog is robust, the repeated delays heighten the risk profile and push the timeline for significant cash generation out to 2027-2028.
• Monitor management's updates on the Federal Aviation Administration (FAA) certification progress and the final magnitude of customer concessions, as these are the primary catalysts that will dictate whether the stock faces further downside or begins to stabilize.
• Re-evaluate valuation models using the delayed cash flow stream, as Jefferies' new $255 price target is now based on a 2028 FCF yield, indicating that a return on investment is a more distant prospect.