Boeing: Why Analysts Think Now's The Time To Be Brave

Key Points

• Boeing's shares are starting to show some potential despite ongoing challenges.
• Some analysts are calling for as much as 60% upside from current levels. 
• The company has a lot of work to do to win back investor confidence, but the risk/reward profile is tempting. 

Boeing Co NYSE: BA shares have certainly seen better days, with the ongoing 45% slide from the end of last year speaks volumes. The company is tackling a seemingly never-ending list of challenges: leadership shifts, strike-related slowdowns, safety concerns, and the looming risk of a credit downgrade. 

As we head into the last couple of weeks of the year, Boeing shares remain at their lowest levels since 2022. Based in Seattle, Boeing's current market cap of $95 billion places it as one of the aerospace giants, even amid these headwinds. And for those on the sidelines with a taste for risk, this may be a rare opportunity to get involved. Let's jump in and take a closer look. 

Poor Fundamental Performance

Ripping the bandaid off first, the latest update from Boeing in terms of their financials was not great. Last week's earnings report showed the company missed analyst expectations for both EPS and revenue. This was, for the most part, driven by the ongoing strikes by the International Association of Machinists (IAM) and supply-chain hurdles. Yet new CEO Kelly Ortberg remains optimistic about turning things around and outlined plans to streamline operations, saying, "We're going through a portfolio process right now to look at the overall portfolio and seeing what we want to look like five years from now." 

While Boeing's recent stock performance reflects its struggles, broader market performance could throw it a lifeline. The benchmark S&P 500 index has been hitting fresh highs, and with the Fed starting to cut rates, there's a distinct risk-on sentiment that increases investor appetite for companies with high upside potential. In terms of risk/reward profiles, Boeing's is certainly up there.

Bullish Analyst Updates

This theory is backed up by the fact that many analysts are exceedingly bullish on Boeing. Big names in the industry have recently given Boeing buy ratings. Royal Bank of Canada, UBS Group and Susquehanna have all reiterated their Buy ratings on the stock in the past week. 

So have the teams from Robert W. Baird and Benchmark, who echoed their peers by honing in on the fact that the worst-case scenario is likely already priced into Boeing shares, and any kind of upside surprise could spark a recovery rally. Benchmark's $250 price target should be more than enough to get investors paying attention here, as from where Boeing shares closed on Tuesday, that's pointing to a targeted upside of around 60%. 

Remaining Concerns

For all this optimism, though, there's no getting away from the fact that Boeing's reputation has taken a serious hit in recent years, and the company is going through what is arguably the toughest stretch it's ever faced. 

Investors should keep in mind Morgan Stanley's recent Equal Weight rating, suggesting that the firm's problems aren't yet in the rear-view mirror, as well as Wells Fargo's outright bearish Underweight rating. Their $86 price target is a sobering reflection of just how bad things could get if Kelly Ortberg doesn't start delivering. 

However, for those brave enough to take on some risk, there's no doubt this year's dip could be the start of a tempting entry opportunity, especially for those with a long enough time horizon. 

Getting Involved

For investors who appreciate technical indicators, Boeing put in what's starting to look like a hard low, at least for the short-term, earlier this month. While shares opened down again yesterday, they bounced hard before breaking that recent low, a sign that perhaps there's a solid layer of buyers happy to snap shares up anywhere around the $150 mark.  

The stock's Relative Strength Index (RSI) reading of 46 should also be encouraging. The RSI measures the strength and momentum of a stock's recent performance on a scale from 0 to 100, with a reading below 30 suggesting shares are oversold. At 46, Boeing's RSI is very much on the oversold side of things, further strengthening the risk/reward profile. 

Investors getting involved should not be looking to make a quick buck here, and they may well have to pinch their noses. But on the whole, you can't help but feel there's a bargain to be had with Boeing right now, and it could well be the right time to be brave.