Case Study: Boeing (BA) stock according to high performing analysts
Key Points
Performance
Boeing shares fell by 4.83% this week. On a year-to-date basis, Boeing shares are now up by 3.23%. This compares poorly to the S&P 500 which is up by 8.20% on a year-to-date basis thus far.
Event & Impact
After a strong Q1, in terms of 737 Max deliveries and production guidance, this week Boeing announced that it was having supply chain issues which would disrupt its growth outlook.
Noteworthy News:
In early April, reports broke that Boeing had plans to increase 737 Max production up to levels that were well above what investors saw prior to the COVID-19 pandemic and the 737 Max crashes in Asia and Africa. This bolstered the bullish sentiment surrounding shares. But Friday, shares sold off by 5.56% with near-term growth in jeopardy.
Nobias Insights
48% of recent articles published by credible authors focused on Boeing shares offer a “neutral” bias. However, three out of the four credible Wall Street analysts who cover Boeing believe shares are likely to rise in value. The average price target applied to BA shares by these credible analysts is $236.25, implying upside potential of 17.1% relative to the stock’s current share price of $201.71.
Bullish Take Noah Poponak, a Nobias 4-star rated analyst, stated, “Goldman Sachs raised the firm's price target on Boeing to $270 from $261 and keeps a Conviction Buy rating on the shares after the company reported its total delivery numbers for Q1.”
Bearish Take Nobias 4-star author, Rob Williams stated, “Boeing on Thursday declined 4.2% in after-hours trading after the plane maker warned that deliveries of its best-selling 737 Max jet might be delayed because of issues with a part supplied by Spirit AeroSystems.”
BA Apr 2023
Boeing shares have been on a nice run over the last year, rising by double digits, as the stock continues to bounce back from its post-pandemic sell-off inspired by the 737 Max catastrophes in Asia and Africa. However, this week Boeing experienced a setback. Its shares fell by 4.83% this week, underperforming the S&P 500 which was up by 1.51% this week.
On a year-to-date basis, BA shares are now up by 3.23%. Once again, this means that they’ve underperformed the broader market. The S&P 500 is up by 8.20% during 2023 thus far. However, despite Boeing’s recent setback, the credible analyst community that Nobias tracks believes that the stock offers double digit upside potential.
Bearish Nobias Credible Analysts Opinions:
Nobias 4-star author, Rob Williams, covers the Boeing beat at Seeking Alpha and in several recent reports he has highlighted the company’s success throughout 2023 thus far. In an April 11th report, Williams said, “Boeing in March delivered 64 planes, the most since December, as the aircraft maker seeks to ramp up production.” “The deliveries included seven 787 Dreamliners and 52 of its best-selling 737 Max narrowbody planes,” he added.
Overall, looking at the company’s Q1 results, Williams said, “First-quarter deliveries of commercial jets rose 37% from a year earlier to 130 in total, beating the Wall Street consensus estimate of 120.” Looking at Boeing’s press release regarding Q1 deliveries, we see that 113 of these 130 deliveries during Q1 were 737 models.
Boeing’s 787 planes accounted for 11 Q1 sales, 777 planes represented 4 sales, and the company delivered 1 of each of the 747 and 767 models. Williams also recently noted that Boeing planned to increase production of its 737 model - a move that analysts predicted would increase the company’s cash flows. He wrote, “Boeing rose as much as 1.1% after the report from Bloomberg News said the company's goal is to deliver 38 of its 737s a month starting in the middle of the year. The delivery goal is earlier than analysts expected.”’
A recent report published by Valerie Insinna at Reuters noted that Boeing’s production increases are likely to continue for years to come. Insinna wrote, “Boeing Co intends to restore production of its bestselling 737 MAX jet to its 2019 rate of 52 a month by January 2025 as it seeks to fully recover from two deadly crashes and the COVID-19 pandemic that curtailed output, two people familiar with the matter said.”
Joe Toppe, a Nobias 4-star rated author, recently highlighted a bullish catalyst for Boeing: the acceptance of its 737 narrow body planes in the Chinese market. He wrote, ”The Boeing Company announced Tuesday that 11 Chinese airlines have returned the company’s maligned 737 MAX to service as of April 10.”
The 737 Max planes were grounded in response to the deadly crashes in Indonesia and Ethiopia; however, in recent years, the plane has re-entered service for most airlines across the world. But, Toppe notes, “China is the last major market to resume flying the MAX amid ongoing trade tensions with the United States.”
Due to the potential size of China’s aerospace market, regaining traction there has been a top priority for Boeing management. Toppe addressed this, stating, “To support the MAX's return to commercial service in China, Boeing is offering enhanced 737 MAX training following the company’s upgrade to a training device at the Shanghai Flight Training Campus.” All of this positive 737 news helped to bolster Boeing’s share price throughout the start of 2023.
Bullish Nobias Credible Analysts Opinions:
From January 1st to April 13th, Boeing shares were beating the market, up by 9.3%. Several credible Wall Street analysts that are tracked by the Nobias algorithm came out with bullish notes on BA shares after the Q1 delivery figures were updated.
According to the Fly on the Wall, “Goldman Sachs raised the firm's price target on Boeing to $270 from $261 and keeps a Conviction Buy rating on the shares after the company reported its total delivery numbers for Q1. The official reported orders for March were solid, and demand remains strong, with the ongoing recovery in air traffic and desire for more fuel efficient aircraft driving continued strength in new order demand moving ahead, the analyst tells investors in a research note.” The Goldman analyst, Noah Poponak, is a Nobias 4-star rated analyst.
Furthermore, the Fly on the Wall also recently reported that, “Susquehanna analyst Charles Minervino noted Boeing announced March 2023 aircraft deliveries of 64, led by 53 737's. Aircraft deliveries came in 21 above our estimate and significantly improved from 34 in March 2022. With demand picking up broadly across multiple international regions and Chinese demand still to turn the corner, we think there is still a multi-year runway for Boeing to grow its order book as well as deliveries. Susquehanna maintans [sic] its Positive rating and $260 price target on Boeing shares.” Minervino is a Nobias 4-star rated analyst. However, that changed late in the week when a report broke that cited supply chain issues for the 737 Max planes which would hurt Boeing’s production schedule moving forward.
In an April 13th report, Williams wrote, “Boeing on Thursday declined 4.2% in after-hours trading after the plane maker warned that deliveries of its best-selling 737 Max jet might be delayed because of issues with a part supplied by Spirit AeroSystems.”
Williams said: “This is not an immediate safety of flight issue and the in-service fleet can continue operating safely,” Boeing said in a statement. “However, the issue will likely affect a significant number of undelivered 737 MAX airplanes, both in production and in storage.”
Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.
Williams wrote that Spirit Aerosystems (SPR), the supplier of jet fuselages issued its own statement, which read: “Spirit is working to develop an inspection and repair for the affected fuselages. We continue to coordinate closely with our customer to resolve this matter and minimize impacts while maintaining our focus on safety.”
Williams also said that Boeing stated, “We expect lower near-term 737 Max deliveries while this required work is completed." This has dampened the company’s growth outlook, causing shares to fall by 5.56% on Friday.
Overall bias of Nobias Credible Analysts and Bloggers:
Still, 3 out of the 4 credible Wall Street analysts that the Nobias algorithm tracks who have offered an opinion on BA shares maintain their bullish outlook. Currently, the average price target being applied to Boeing by these credible individuals is $236.25.
Today Boeing trades for $201.71, meaning that the credible analyst average price target implies upside potential of approximately 17.1%.
Disclosure: Nicholas Ward has no BA position. Nicholas Ward wrote this article for Nobias at their request with the intention of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.
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