Stifel initiated Boeing (NYSE:BA) with a Buy rating and $265 per share price target in a note covering the commercial aerospace sector on Friday.
The firm said it has a positive view of the sector, with new aircraft production now having a greater likelihood of improving than getting worse.
"Given our view that the post-pandemic recovery is stabilizing, we believe commercial aero is becoming mid-cycle, and mid-cycle tends to be characterized by rising aircraft production, which benefits OEMs and suppliers while reducing pricing power for aftermarket," said the analysts at Stifel, adding that Boeing is one of its top picks.
Focusing on Boeing, the analysts said the company and its suppliers stand to see the most upside as after-market growth should start to slow. "Our view is that, while aftermarket fundamentals should remain strong in 2024, we are, ultimately, going to see easing in pricing power and slowing growth," they explained.
"Boeing is on track to see build rates improve, which, when paired with BGS strength and modest BDS improvement, should position the company to see material FCF growth over the next 2+ years that we think will drive upside for shares as demand for new aircraft remains very high," added the analysts at Stifel.