Wells Fargo analyst Matthew Akers shocked the market this week when he dropped his price target on Boeing (NYSE: BA) to $119 (down from $185) and cut his rating to underweight from equalweight. The new target represents a 26% discount to the current price.

Should investors take Akers’ update as valid and consider selling the stock?

Boeing gets a downgrade

An analysis of Akers’ report suggests his reasoning is sound, and there are serious questions about Boeing’s free cash flow (FCF). The company ended the second quarter with $57.9 billion in consolidated debt and only $12.6 billion in cash and marketable securities.

Moreover, Boeing management has already told investors that this will be a year of cash burn, and Wall Street has a cash outflow estimate of $7.6 billion penciled in. In addition, there are no shortages of potential drains on cash flow. Its defense business is generating ongoing losses, the acquisition of fuselage supplier Spirit AeroSystems might lead to investment in that company, a high-profile employee contract negotiation may result in cost increases, and over the long term, Boeing will also need cash to start funding a new airplane development program.

As Akers notes, a new stock issuance (raising funds while diluting existing shares) is a possibility.

What does it mean for Boeing investors?

The bearish case is powerful, but throwing in the towel might be premature. Wall Street expects $8 billion in FCF, $10.8 billion in earnings before interest, taxes, depreciation, and amortization (EBITDA), and $31.3 billion in net debt in 2026.

That would put Boeing on a generally acceptable net debt-to-EBITDA multiple of less than 3 and make it easier for Boeing to raise debt rather than sell equity, provided it needs cash.

Based on market expectations, Boeing can muddle through without diluting existing shares. That said, a few quarters of improving delivery rates on commercial airplanes and avoiding significant charges with defense contracts would go a long way to restoring confidence in Boeing’s ability to deliver on market expectations.

Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.