Shares of Boeing (BA) have cratered 38% year-to-date due to company-specific issues and selling pressure faced by the broader stock market. The company has been hit with regulatory delays, ongoing supply chain issues, and feels a strong sense of regret for taking on an Air Force One contract.
The company now faces more supply chain issues that could impact the Boeing 737 MAX production and delivery. While the company doesn’t expect the parts shortage to disrupt its full-year plan, one can only take management’s word for it.
Undoubtedly, various airlines are getting sick of all the delays, and eventually, they’ll cave and go over to Airbus for planes. Still, Boeing’s lone competitor can’t take all of its business, especially given that parts shortages and supply-chain hiccups have been so commonplace across the industry.
Today, Boeing stock is back around $130 per share. A few more bad days could bring the stock back to March 2020 lows. Undoubtedly, the outlook for travel is a lot better than it was during the panicky days of the 2020 stock market crash. Still, nothing seems to be keeping BA stock from nosediving these days.
Despite all the bad news, I remain bullish on BA stock.
Boeing: Huge Challenges Lie Ahead
Reportedly, the company is looking to issue more stock to improve the state of its balance sheet. For Boeing to climb out of its funk and meet its 787 Dreamliner delivery milestones, the firm could really use a cash jolt.
It’s going to take a lot of time and cash to get back on the right track. However, Boeing stock faces considerable upside potential should it hit any of its milestones. At these depressed multiples, it seems as though investors doubt Boeing’s ability to hit any of its goals on time.
Delays and disappointment are what you’d come to expect from Boeing. With Boeing CFO Brian West outright stating that his firm is “on the verge of turning a corner,” there are reasons to be encouraged.
I think the stage has been set for a remarkable turnaround. It’s just a matter of if the current management team can pull it off. If they can’t, one has to think that CEO David Calhoun could be headed for an exit. Such a move would likely be viewed in a positive light by investors, given the brutal performance of BA stock.
China has yet to give the 737 MAX the green light to return to service. Such approval could act as a major near-term catalyst for shares of Boeing. It’s expected that China is “close” to allowing the craft to fly again, perhaps as soon as the second quarter.
Whether or not China allows the 737 MAX to fly again anytime soon, Boeing needs to navigate a supply chain that continues to be turbulent. For now, expectations are low, and any small bits of good news could be material for the stock.
Wall Street’s Take
According to TipRanks’ analyst rating consensus, BA stock comes in as a Strong Buy. Out of 18 analyst ratings, there are 15 Buy recommendations and three Hold recommendations.
The average Boeing price target is $227.69, implying 75.8% upside. Analyst price targets range from a low of $180 per share to a high of $307 per share.
Bottom Line on Boeing Stock
Boeing stock has been a turbulent ride, to say the least. Looking ahead, the company is likely to issue more stock to repair the balance sheet. It needs the extra cash to move through what could be the last barriers separating the stock from a meaningful rebound.
At writing, shares of BA trade at a mere 1.4 times sales. That’s close to the cheapest the stock’s been since the depths of 2020. Though I don’t suspect smooth sailing moving forward, I am a fan of the company’s plan to get production back up to speed.
The company is constrained on the supply side, but all signs point to demand remaining strong. When Boeing is ready to deliver, I suspect there will be more than a handful of customers that will be ready to receive.
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