After some period where Boeing (NYSE:BA) has been experiencing a plague of low buy ratings since 2019, the tide however seems to be turning as the A&D giant revealed June delivery metrics on Tuesday, while the investors’ shares rose by about 8% in trading.
Apparently, being the aircraft maker’s best month for deliveries since March 2019, the company reportedly delivered 51 passenger and cargo planes in the month of June.
Moreover, the first half of 2022’s tally increased to 216 jets, which represents a 38% year-over-year increase. Obviously, the company has started recovering from the low buy ratings; which resulted from the temporary ban of 737 MAX aircraft in March 2019, when the brand’s fatal crash took place.
Boeing Faces Plethora of Challenges
Boeing (NYSE:BA) has faced a plethora of problems in recent years, apart from the general drop in demand for passenger planes that occurred during the pandemic. It’s still awaiting approval to commence delivering the 787 passenger planes that have been stopped due to quality control issues.
However, as much as this reflects the excellent progress of the company towards a profound 2H; the results seem different and not much of an overhaul for JPMorgan analyst Seth Seifman.
“June deliveries were strong, but this was expected, and while we view the result as a plus, it won’t be easily replicated each month,” Seifman said.
He added that the potential for orders at next week’s Farnborough air show, as well as the resumption of 787 deliveries likely approaching, means Boeing (NYSE:BA) could sustain some of the momentum seen July 13, although JPMorgan’s fundamental outlook is not much different.
Meanwhile, the delivery included 44 737s (43 MAXs), comprising 31 monthly production rates and the company’s target to minimize excess supply by 10-15 per month. Then maintaining the pace of the development throughout the year remains the focus of the company, though not easy to achieve; concluded by the analyst.
According to Seifman, there have been predictable strong deliveries in every year quarter’s final month, thus explaining the likelihood of a pullback in July based on the established seasonality. On this note, Seifman anticipates Boeing to deliver approximately 40 planes per month in the year’s latter half, which will add up to around 450 total deliveries for 2022.
Although there’s no significant change to Seifman’s buy rating yet, as it goes along with a $188 price target, the figure suggests shares will add 28% in the subsequent months.
Ultimately, based on 15 Buys vs. 3 Holds, the stock boasts a compelling Buy consensus rating, which explains why most analysts agree with J.P. Morgan, then the average target becomes more bullish than Seifman will permit; at $218.24, the figure represents one-year returns of 51%.
Undoubtedly, it’s an uphill battle to turn things around and drastically restore the company’s great buying rate; nonetheless, investors keep hoping to see $250-$300 in 3-4 years.
As a leading global aerospace company, Boeing (NYSE:BA) develops, manufactures and services commercial airplanes, space systems and defense products for customers in over 150 countries. As a top US exporter, Boeing leverages the talents of a global supplier base to advance economic opportunity, sustainability and community impact.
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