Boeing Company (NYSE:BA) finds itself in a turbulent start to 2024, grappling with the aftermath of a high-profile incident involving a door detachment on a Boeing 737 Max jet. The resultant grounding of multiple fleets by major customers, including Alaska Air Group and United Airlines, has raised concerns about potential risks to future jet orders with Boeing. In response to these challenges, BA has witnessed a substantial 23% correction in its stock price this month, leaving it close to oversold territory.
Investors now face the crucial question of whether this sharp pullback presents an opportune moment to buy Boeing stock or if the underlying fundamental challenges are too formidable at this time. Key factors and analyst forecasts offer insights into the potential trajectory for BA stock.
Earnings Performance
Boeing’s October earnings report missed Wall Street expectations, revealing revenue of $18.1 billion against the anticipated $18.25 billion. Despite a 6% decline in commercial airplane deliveries, the company reported a 25% increase in revenue from this segment to $7.9 billion. Losses, a persistent concern for Boeing, nearly halved to $3.26 per share from the prior year. The company closed the third quarter with a substantial cash balance of $6.8 billion, comfortably exceeding its short-term debt obligations of $4.9 billion.
Analysts anticipate an improved adjusted loss of $0.72 per share in the upcoming Q4 report, compared to a loss of $1.75 per share in the corresponding period last year. Revenue is expected to rise by 5.5% YoY to $21.08 billion.
Order Backlog and Production Guidance
Boeing’s order backlog, standing at $469.2 billion, with 5,626 planes in backlog, will be closely scrutinized. Despite the recent challenges, cancellation and deferral requests for Boeing’s aircraft were at a low 2.6% in 2023, below the historical average of 6%.
Investors will be keenly observing any impact on the order pipeline due to the 737 Max issues and seeking insights into production guidance. While concerns about weakening demand and potential customer shifts are prevalent, Boeing’s management is expected to address these issues and safeguard against criticisms of rushed manufacturing practices.
Analyst Outlook and Recommendations
Following the 737 Max incident, Morgan Stanley updated its outlook on Boeing, assigning an “equal weight” rating with a $255 price target. The bull case target is $300, and the bear case is $130. Analysts at Morgan Stanley perceive balanced risk-reward in the long term, considering the underappreciated bear case and limited bull case due to supply chain constraints.
Despite the recent challenges, analysts maintain a consensus rating of “Strong Buy” for Boeing, with a mean target price of $270, indicating a 35% premium to current levels. Out of 20 analysts covering the stock, 14 recommend a “Strong Buy,” 1 suggests a “Moderate Buy,” and 5 advise a “Hold.”
While analysts express confidence in the long-term prospects of Boeing, potential investors may want to exercise caution and await more clarity on the impact of the 737 Max groundings before making investment decisions. Management’s commentary in the upcoming earnings report may provide valuable insights that could influence the stock’s trajectory.
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Author Faith Yakubu 
