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Boeing is ‘COVID-19 recovery play,’ Morgan Stanley says

Boeing Co. is a COVID-19 pandemic recovery play with a “clear runway” for more upside.

That’s the view of analysts at Morgan Stanley, led by Kristine Liwag. The analysts took the somewhat unusual step of upgrading their ratings on Boeing BA, -1.09% stock by two notches, to their equivalent of buy from sell.

They also raised their price target to $230 from $165, representing upside of around 17% from Friday’s price.

Boeing stock is poised for a weekly loss of more than 4% on the heels of a large earnings miss on Wednesday. Boeing said it lost more than $8 billion in the fourth quarter, while revenue fell a little less than forecast shored up by its defense, space and security business.

The “bar is low,” the analysts said, but without significant, additional headwinds for the company there’s further upside. Boeing is also under-owned by investors, and a COVID-19 vaccine rollout, eventual easing of borders, and airlines booking trends are all potential catalysts that could influence bears and sidelined investors, Morgan Stanley said.

The analysts also took into consideration the recent return-to-service of Boeing’s 737 Max, grounded for nearly two years following two deadly crashes. American Airlines Group Inc. AAL, -5.69% on Friday said it has taken delivery of 737 Max planes and is waiting for more.

U.S. aviation authorities cleared the Max for flight in November and earlier this week European aviation authorities did the same.

Shares of Boeing have lost nearly 40% in the past 12 months, contrasting with gains of around 4% for the Dow Jones Industrial Average DJIA, -2.11% and 14% for the S&P 500 index. SPX, -2.22%

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