Inside a Boeing 737.
Patrick T. Fallon/AFP via Getty Images
The last couple of years have been tough for Boeing stock. Shares have been, essentially, cut in half from their peak of about more than $440 a share. That peak, of course, was pre-Covid and pre-737 MAX woes. But Boeing shares, which are at about $228, can move back to $300 by the end of 2022 if things settle down for the large American airplane maker.
Tuesday, Seaport Global analyst Richard Safran reiterated his Buy rating on Boeing stock (ticker: BA) and said it’s a good idea for investors to buy now as a 2022 turnaround story. His price target is $298 a share.
Safran launched coverage of Boeing stock at Seaport with a Buy rating in June 2020, and he now believes he was too early. He didn’t see the Covid pandemic lingering as long as it has. What’s more, he didn’t see problems on Boeing 787 planes adding to its woes on its 737s.
The 737 MAX jet was grounded worldwide for about 20 months, beginning in March 2019, after two deadly crashes inside of five months. MAX deliveries resumed near the end of 2020. But 787 jets aren’t being delivered right now because of quality problems discovered in recent months.
Still, when Safran looks at 2022 and beyond—in a period where Boeing has less drama and more planes produced—he sees the stock moving north of $300.
It isn’t hard to justify that view. Airbus (AIR. France) and Boeing shares both trade for around 20 times estimated 2022 cash flows. But based on 2023 estimated numbers, Airbus is trading for about 18 times and Boeing stock is trading for less than 14 times.
If Boeing were to trade like Airbus on its projected 2023 numbers, the stock would be between $300 and $330 a share. Investors just need confidence that 2023 will turn out well for Boeing.
The tide is starting to turn, according to Safran. “Investor sentiment appears to be improving following” Boeing’s third-quarter earnings, wrote the analyst in a Tuesday note. “The general trend is that the worst is likely behind [the company].”
Safran doesn’t have the highest price target on the Street. He is among a group of bulls with price targets around $300. The bottom few still have price targets for Boeing stock roughly where it trades now.
Overall, about 61% of analysts covering the stock rate shares Buy. The average Buy-rating ratio for stocks in the S&P 500 is about 55%.
Boeing stock is down 2.3% in Tuesday trading. The S&P 500 and Dow Jones Industrial Average are up about 0.7% and 0.5%, respectively. Boeing stock, however, jumped 5% Monday after the start of the Dubai Air Show on Sunday. For the week, it’s still up more than 3%.
Companies such as Boeing and Airbus do a lot of business at air shows. Tuesday, Akasa Air ordered 72 MAX jets for the Indian market. That deal was signed in Dubai.
Write to Al Root at [email protected]
