As if a global pandemic weren’t enough to hurt production, throughout 2020, the Boeing Company (BA) had been dealing with thousands of grounded and undelivered 737 Max aircraft, due to technical difficulties. After a global nullification of the plane’s operational certification, Boeing has been working to get its fleet back into the air, in as many countries as possible. One of its biggest markets is expected to re-certify over the next few months. (See Boeing Company stock charts on TipRanks)
Detailing this expectation and its implications is Sheila Kahyaoglu of Jefferies Group, who wrote that the backlog created by China amounts to about 20% of Boeing’s production ramp. A recertification by this year’s end is possible, and good news has been reported out of the nation as of late.
Kahyaoglu assigned a Buy rating on the stock, and determined a price target of $300. This target indicates a possible 12-month upside of 32.74%.
The four-star analyst mentioned that the Chinese government has been “preventing domestic airlines from buying ‘tens of billions of dollars’ of BA aircraft.” However, she perceives this fact as one which could provide upside if/when these restrictions dissolve. The matter remains somewhat binary for BA, because a negative result in terms of Chinese regulatory approval would most likely create selling pressure on the stock.
Boeing has recently seen gains, due in part to the “positive commentary around the MAX recertification in China,” although Kahyaoglu sees the gains as logical and in-line with expectations. She anticipates another 5% bump in stock price upon Chinese regulatory approval of the aircraft.
On TipRanks, BA has an analyst rating consensus of Moderate Buy, based on 7 Buy and 6 Hold ratings. The average Boeing Company price target is $275.25, suggesting a possible 12-month upside of 21.79%. BA closed trading Friday at a price of $226 per share.
Disclosure: At the time of publication, Brock Ladenheim did not have a position in any of the securities mentioned in this article.
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