The MAX-737 jet still isn’t allowed to carry commercial passengers in China.
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Boeing stock is gaining on reports about the 737 MAX jet. But the news investors really want to hear remains elusive.
The shares were up about 0.9% in afternoon trading Wednesday. The S&P 500 and Dow Jones Industrial Average were up 0.2% and 0.5%, respectively.
News about the Boeing (ticker: BA) 737 MAX is the most likely reason for the outperformance. China reportedly tested the MAX Tuesday. Boeing (ticker: BA) declined to comment on any test flights.
A test flight is part of the process of recertifying the MAX in China, but it doesn’t have to be the final step in the process. Boeing, as well as Chinese aviation regulators, probably won’t say much until the plane is approved to fly. Boeing won’t say anything because the decision isn’t up to it, and regulators generally don’t put fixed timelines on their certification work.
The MAX was grounded worldwide between March 2019 and December 2020 following two deadly crashes inside of five months. The MAX was recertified to fly in the U.S. in December and 175 countries have signed off on Boeing’s fixes. The company has shipped more than 150 MAX jets since December.
Recertification of the MAX in China would be a small boost to Boeing stock. The MAX has most of its customers, and does most of its flying, in the U.S. Only about 100 of the 4,000 unfilled MAX orders are destined for China.
Still, the Chinese market matters for Boeing. It can account for up to 25% of the market for new jets, according to Credit Suisse analyst Robert Spingarn. Boeing needs to maintain a strong relationship with Chinese authorities so things go smoothly for the MAX and for products it wants to sell there in the future.
Spingarn rates Boeing shares Hold and has a target of $265 for the price. The average price target isn’t far away, at about $271. Overall, about 55% of analysts covering the company rate shares Buy. The average Buy-rating ratio for stocks in the S&P is about 55%.
Boeing stock is up about 11% year to date, trailing a little behind the comparable 15% gain of the Dow. Boeing is a Dow component.
Write to Al Root at [email protected]
