Many investors have recently been cautious about the plane maker giant Boeing due to its slumping stock, 35.5% down year to date and the company’s mounting debt. However, investment firm CFRA Research analyst Colin Scarola argues that now is the right time to buy the shares of Boeing as they are poised for a big rise in the near future.
In a recent note sent out to clients, Scarola reiterated its confidence in Boeing stock by keeping the Strong Buy rating in place. The analyst also set the price target for the stock at $252, almost double compared to its recent price of $132.01.
According to Scarola, the fear that investors have about the ability of Boeing to deal with the economic challenges “is misplaced” and that the company’s stock will surge up to 92 percent.
“Boeing has no floating rate debt outstanding, meaning rising interest rates won’t impact its earnings, all else equal,” Scarola explained via Yahoo Finance. “Further, we expect the firm can repay all future debt maturities out of free cash flow without the need to refinance at higher rates.”
Scarola added that the company can tap into its “cash pile” to cover the maturing debt in 2022 and 2023, even if it doesn’t reach the projected cash flow. He also thinks that the company is well positioned to respond to possible challenges in the future, like the recession.
