Boeing’s Stock (NYSE:BA) Pulls Back From Highs On Strike News

Boeing's stock (NYSE:BA) is mildly lower today, down 0.24% bucking the trend of broader market gains, with the S&P 500 up 1.1%, and the Nasdaq 100 having added 1.5% on the day.

The dip follows news that over 3,200 Boeing defense workers initiated a strike today, further complicating the aviation giant's efforts to recover from a series of operational and financial challenges.

Despite the pullback from recent highs, the stock is in a broad uptrend, having gained 28.56% since the start of the year.

The strike involves unionized employees at Boeing's defense facilities in St. Louis, Missouri, and Mascoutah, Illinois. These workers are critical to the assembly of military aircraft, including the F-15 and F/A-18 fighter jets, as well as the MQ-25 refueling drone.

The labor action stems from the rejection of Boeing's latest four-year contract proposal by the International Association of Machinists and Aerospace Workers (IAM).

The rejected contract reportedly offered a 20% general wage increase over four years, a $5,000 ratification bonus, and enhanced vacation and sick leave.

Union members, however, deemed the offer insufficient, citing ongoing concerns about pay, work schedules, and pension benefits.

Boeing has voiced its disappointment with the union's decision, with Dan Gillian, the vice president of Boeing's Air Dominance unit, stating, “We're disappointed our employees rejected an offer that featured 40% average wage growth.” The company has indicated that it has implemented contingency plans to minimize operational disruptions.

This labor dispute is the latest in a series of challenges for Boeing. The company is still working to overcome safety issues related to the 737 MAX, as well as the lingering effects of an almost eight-week strike by passenger plane workers last year. These past disruptions have already strained Boeing's production timelines and financial performance.

Analysts are mixed on Boeing's near-term prospects, yet the average price target of $250 is more than 10% up from here.

While recent company guidance indicates that Q3 cash flow is expected to be similar to Q2, executives are still aiming for positive cash flow by year-end. The strike does cast some shadows over projections, depending on how long they take to resolve.