Boeing (NYSE:BA)
Credit Suisse is pessimistic about the future of Boeing (NYSE:BA). Therefore, the bank has begun coverage of the aerospace giant with a sell rating. Boeing stock fell as much as 3% on Wednesday due to the news.
What are the Reasons?
Recently, Boeing (NYSE:BA) has had a rough go with the 737 MAX problems and the pandemic. A decline in cash flow due to fewer deliveries to airlines has contributed to a 400% increase in the company’s overall debt over the last five years.
However, Boeing (NYSE:BA) still has a ways to go before it can be considered successful again. Credit Suisse analyst Scott Deuschle warns potential investors to tread carefully with an underperforming rating and a $98 price target on Boeing stock. Compared to projections from other Wall Street pros, that one is quite conservative.
According to Deuschle, aerospace is a “zero-sum game,” and Boeing’s company position is in the losing camp. He believes that ongoing tensions between the United States and China will have a negative impact on the firm’s sales and that Boeing (NYSE:BA) will have difficulties in its efforts to increase orders and cash flow.
After two deadly crashes involving the 737 MAX, Boeing (NYSE:BA) grounded the plane for 18 months while it fixed the underlying technical problems. However, the green light has not been given to begin operations in China. Recent developments, such as the first foreign operator of the MAX being granted permission to fly the jet over China, are encouraging. However, many experts still attribute the setbacks to wider geopolitical issues.
There is still a chance that the Chinese government may pressure airlines to buy aircraft from Boeing’s archrival Airbus, even if the MAX is approved by Chinese authorities (OTC: EADSY).
What’s Next?
Boeing’s third-quarter delivery numbers improved, indicating the firm is on the upswing. How long that restoration will take is a crucial concern for investors. There is a lot of unpredictability around Boeing stock at the moment, with Deuschle’s worries about China and the larger worry that a weakening global economy might drive airlines to delay purchases.
Credit Suisse sees TransDigm Group and Heico outperforming among firms involved in commercial aerospace, while it has a neutral rating for Raytheon Technologies. Northrop Grumman, L3Harris Technologies, and BWX Technologies are the military contractors the bank prefers. Investors in the aerospace industry may want to look other than Boeing stock if the next several quarters pan out as Deuschle anticipates.
Meta Description
Boeing stock was included in Credit Suisse’s coverage debut with an underperforming rating and a $98 price target.
Featured Image – Megapixl © Richair
Author Shariq Khan 
