The last time I weighed in on Boeing (NYSE:BA), I noted that the stock “appears to have priced in a substantial amount of fear and negativity. Many investors also believe Boeing stock has hit bottom.”
That was on January 17, when BA stock was trading at $321.09. At the moment, the stock is up to $345.81, and I still believe it could recover to $400 before the year is out.
Granted, it still faces headwinds from the 737 MAX issues. However, the FAA has revealed the 737 MAX is almost ready for its first test flights, and company executives believe the plane “will return to service mid-year.”
“We’re working with regulators around the world and have a little cushion in that, but that’s our schedule,” said BA commercial marketing VP Randy Tinseth.
Should that happen, BA stock could easily return to $400 a share.
Bullish Analysts Believe BA Stock Could See Lift Off Soon
Credit Suisse analyst Robert Spingarn has a $367 target on the stock with a hold rating. He believed the target price reflects potentially good news on the horizon.
“While nothing material was revealed, the perspectives offered by the company…left us incrementally more constructive on the name,” said Spingarn, adding that BA is “entering into a positive news period.”
However, the BA stock does face risk if the company cannot meet its mid-2020 deadline. While that could send more cash out the door, Spingarn does note BA has plenty of cash on hand, and keeping the dividend safe is a priority.
Benchmark analyst Josh Sullivan is bullish with a “buy” rating and a price target of $375. He believes investors should buy now before passengers are allowed back on the planes. “The Board appointed [Dave] Calhoun as CEO to restore confidence in the company, which includes providing realistic RTS [return to service] expectations,” wrote Sullivan. “In our opinion, the FAA has not rejected the 737 MAX on any fundamental basis but has rather sparred with Boeing over timelines.” He believes Boeing’s proposed fixes are acceptable to regulators, who just need time to thoroughly evaluate the modifications.
Boeing Will Resume 737 MAX Production in Sign of Confidence
Boeing has plans to resume production of its grounded jets before they’re officially allow back in the air – a move that signifies the company’s confidence in its planes. The company also noted it expects for regulators to clear the aircraft for flight by mid-year. Should that happen, and major airlines start to use the planes again soon, we could see clearer skies ahead for BA stock and exhausted shareholders.
Better, “We anticipate that the MAX will receive an airworthiness directive sometime in the second or third quarter of 2020, and we expect that this event is more likely to occur sooner rather than later,” Morningstar recently said, as quoted by Investorplace contributor Todd Shriber. “We also expect that Boeing will be able to ramp up production after recertification without requiring capital expenditure beyond historical norms.”
The Bottom Line on BA Stock
BA shareholders should be buckled up for turbulence, but it’s tough to ignore Boeing stock as it begins to recover from double bottom support dating back to late 2018. Should BA’s 737 MAX return to the skies by mid-year, I strongly believe it could recover to $400 a share before 2021.
As of this writing, Ian Cooper did not hold a position in any of the aforementioned securities.