A Boeing 777x, the newest version of the plane.
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Wall Street is getting more bullish about Boeing, with the stock catching its second upgrade in as many days. The growing consensus is that the worst is behind the company and that a handful of factors will drive shares higher in coming months.
J.P. Morgan analyst Seth Seifman on Thursday upgraded Boeing (ticker: BA) shares to Buy from Hold. His price target goes to $275 from $260.
Boeing shares were up about 2.2% in premarket trading following the bullish call from a large brokerage firm, though the gain faded to about 0.7% by early afternoon. The S&P 500 is up about 0.3%. The Dow Jones Industrial Average is off about 0.1%.
Seifman has been cautious on the stock for a while, downgrading shares to Hold from Buy in March 2020. While Boeing isn’t “out of the woods,” he sees several catalysts coming that can boost the stock. “The first of these—China’s MAX certification—is now in view.”
The 737 MAX was grounded worldwide between March 2019 and November 2020 following two deadly crashes. Most countries have re-approved the plane for commercial flight. China has been relatively slow to lift its MAX prohibition. Seifman believes Chinese re-approval is imminent based on recent media reports.
Two additional positive factors are restarting deliveries of the twin-aisle 787 jet—now on hold while Boeing fixes quality issues discovered in recent months—and the overall recovery in global air travel.
As for the global air travel recovery, Seifman hopes the impact of Covid will fade over time “given the increasing prevalence of vaccinations (and boosters) as well as antiviral ( Merck
), and protease inhibitor (Pfizer), treatments.”
Seifman’s ratings change follows an upgrade Wednesday from Wells Fargo analyst Matthew Akers. He took his rating to Buy from Hold and his price target to $272 from $224 a share. Akers cited many of the same factors as the J.P. Morgan analyst.
With Thursday’s new Buy, 68% of analysts covering the stock rate Boeing shares a Buy. The average Buy-rating ratio for stocks in the S&P 500 is about 55%.
At the start of 2021, only 48% of analysts covering the stock rated shares Buy. And in April 2020, given the pandemic and 737 MAX problems, less than 40% rated shares Buy. Wall Street, it seems, is slowly warming back up to Boeing stock.
Back in early 2019, before the MAX jet was grounded, Boeing stock was a Wall Street darling. More than 75% of analysts covering the stock rated shares Buy at the end of February 2019. The average analyst price target back then was $445 a share.
The average analyst target price bottomed out at $170 in May 2020. The average analyst price target is at about $263 today, about 16% above recent levels.
Write to Al Root at [email protected]
