Boeing glides past series of setbacks on new flight path

Key Points

• Boeing stock is in buy range, closing at $244.70, just 1% above a pivot point at $243.20 on December 8.
• As Boeing recovers from ongoing supply chain issues, Royal Bank of Canada upgraded the stock to outperform with a $200 price target.
• Wall Street expects the company to post a profit in 2024, the first time since 2018 it would be in the black.

A look at the Boeing Co. NYSE: BA chart shows the stock in buy range after taking off from a cup-shaped base. Shares ended the December 8 session at $244.70. That's less than 1% above the base's buy point at $243.20. 

Boeing, along with Goldman Sachs Group Inc. NYSE: GS, led the Dow Jones Industrial Average higher on December 8, 2023. Appropriately enough, Boeing gained $7.37 in the session. That amounted to an increase of 3.11%.

Boeing stock advanced nearly 24% in November, getting some lift from a series of analyst upgrades.

While there's not much news about pandemic-era supply chain disruptions anymore, that problem continued to plague Boeing in 2023. However, on November 28, a team of analysts at the Royal Bank of Canada upgraded BA stock to outperform from sector perform, increasing the price target to $200 from $275. 

MarketBeat's Boeing analyst forecasts show a consensus view of "moderate buy" with a price target of $253.61, a potential upside of 3.64%.

Leading industrials sector higher

That's not much upside, but the stock currently has good momentum, advancing in each of the past six weeks. In the past month, Boeing has been the top performer within the Industrial Select Sector SPDR Fund NYSEARCA: XLI.

Other sector leaders include airline stocks Delta Air Lines Inc. NYSE: DAL, Southwest Airlines Co. NYSE: LUV and American Airlines Group Inc. NASDAQ: AAL.

The fortunes of the airline industry and Boeing are linked of course, and airlines have been on a buying spree.

Boeing shares got a boost in November after Emirates Airlines inked a $52 billion deal to purchase 100 777-X widebody jets. Since Boeing's October earnings report, Southwest, Turkish-German airline Sun Express, flydubai, Royal Jordanian, Royal Air Maroc and Ethiopian Airlines have ordered passenger jets. In addition, Canada selected Boeing's P-8A Poseidon aircraft for defense and surveillance use.  

Boeing shares began to take flight after their most recent earnings report in late October. As MarketBeat's Boeing earnings data show, the company beat on the revenue side but missed on earnings. 

Investors applaud cash flow guidance

Boeing slashed its forecast for 737 Max deliveries, citing production issues. However, the company reaffirmed cash flow guidance, which gave investors something to cheer for. 

In the third quarter, Boeing reported a loss of $3.26 per share, an improvement over the year-earlier loss of $6.18 a share. Revenue grew by 13% to $18.10 billion. 

Boeing expects to deliver between 375 and 400 737 Max jets this year, a lower number than the range of 400 to 450 it previously anticipated.

By the end of the year, the rate of production is expected to be 38 planes a month, and the company has its sights on 50 planes a month by 2025 or 2026. 

The decreased production forecast is due to an issue with a supplier, which the company said has nothing to do with safety. The 737 Max was grounded worldwide for nearly two years after two 2019 fatal crashes attributed to manufacturing issues. Those problems have since been resolved, and the planes have been flying again since November 2020. 

A series of problems plagued the company

The 737 Max debacle was only one in a series of problems Boeing has faced since 2019. Those include engineering changes, labor instability, supplier negotiations, low deliveries, manufacturing flaws, satellite contract costs, and more than $2.4 billion in losses on its Air Force One manufacturing program. 

"We continue to progress in our recovery and despite near-term challenges, we remain on track to meet the financial goals we set for this year and for the long term," Dave Calhoun, Boeing's CEO, said in the third-quarter earnings release.

He added that the company is focused on improving stability in its supply chain as it increases production rates to meet demand. 

Analysts expect Boeing to report a loss of $6.11 per share this year, with the company returning to profitability in 2024. It would be the first time since 2018 for Boeing to report a profit.