Boeing Co (NYSE:BA) may need to delay its annual free cash flow target of $10 billion by two years to 2027-’28 and come up with $30 billion before it can start designing a new aircraft, said Wells Fargo, which lowered its outlook on the company’s shares.

Lead analyst Matthew Akers lowered Boeing from Equal-Weigh to Underweight and cut the target price from $185 to $119.

Following the downgrade, Boeing’s shares declined more than 8% to almost a two-year low on Tuesday, Reuters reported.

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Akers said Boeing has about $45 billion in net debt that it must address before it starts the next cycle for developing airplanes. Getting rid of that debt would burn its cash flow through 2030, he said.

Boeing is dealing with regulatory limitations on making its 737 MAX aircraft that have burdened free cash flow after a mid-air accident in January.

“Given a likely new aircraft launch in the next few years, Boeing will need to shore up the balance sheet sooner,” Akers said in a note.

“We estimate a roughly $30 billion equity raise to get back to zero net debt by 2027.”

Boeing CFO Brian West said during a July earnings call the company would manage its balance sheet in a prudent manner and supplement liquidity as needed.

Boeing’s free cash flow per share could grow to about $20 this decade if it delayed new planes for “several more years” and just paid down debt, Akers said, but that would risk losing market share to rival Airbus SE in the long term.

Price Action: Boeing’s shares, which have lost about a third of their value this year, declined 7.32% to close at $161.02 on Tuesday. Exchange-traded funds that follow the stock also trended downward.

• IShares U.S. Aerospace & Defense ETF (BATS:ITA) fell 3.42%
• Gabelli Commercial Aerospace and Defense ETF (NYSE:GCAD) dipped 2.69%
• Direxion Daily Aerospace & Defense Bull 3X Shares (NYSE:DFEN) dropped 10.31%
• First Trust Indxx Aerospace & Defense ETF ARCA: MISL) slid 2.73%
• Invesco Aerospace & Defense ETF (NYSE:PPA) lost 2.98%

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