Boeing Co (NYSE:BA) — I highlighted BA stock as the Trade of the Day way back on Nov. 4, 2013, when shares were trading around $133. At the time, I noted that the world’s largest manufacturer of commercial jets and second largest military weapons maker was sporting an excellent technical pattern with a long-term target of $150. BA stock made it to a high of $158.83 on Feb. 20, and closed Wednesday at $151.19.
Shares were down 1.4% on the day after the company announced quarterly earnings before the market open. Boeing saw Q1 profits, excluding pensions and other costs, jump to $1.97 per share, well ahead of analysts’ estimates of $1.81. However, revenue lagged a bit and investors sold.
S&P Capital IQ projects operating earnings will rise 17% to $8.66 per share in 2015 and an additional 7% to $9.23 in 2016. Its analysts expect price appreciation over the next several years on strong demand for commercial aircraft, and more cash returned to shareholders through increased stock repurchases and dividends. The company currently pays a dividend of $3.64 per share for a forward annual yield of 2.4%.
Capital IQ rates BA stock a “buy” with a12-month target of $168, which is about 19.4 times its 2015 EPS estimate and in line with the stock’s 10-year historical P/E.
Technically, BA stock is consolidating within a rectangle with support at $148 and resistance at $155.30. Within this band is the 50-day moving average at $152.21, which traders should use as a buy point when shares trade above it on high volume or close below it like we saw on Wednesday, offering a bargain buy day.
My trading target for BA stock is $164, which is 8.5% above the current price. However, investors should consider holding shares of this well-managed aerospace giant as a cornerstone investment.
