Marking a positive turn for Boeing, one analyst has changed their stance on the company's stock and given a recommendation to buy shares. The main factor behind this revised outlook is the increasing number of commercial jet deliveries.
Scott Deuschle, an analyst at Deutsche Bank, has upgraded Boeing's (ticker: BA) stock from Hold to Buy. Along with this upgrade, Deuschle has set a new price target of $270, which is approximately 30% higher than the recent trading levels.
In his analysis, Deuschle emphasizes the direct correlation between aircraft deliveries and financial performance. He believes that better deliveries will result in improved earnings and an increase in free cash flow. According to the analyst, Boeing accomplished 480 jet deliveries in 2022 and is projected to deliver around 520 units this year. Looking ahead, there are even more promising figures: an expected 700 deliveries in 2024, followed by 800 and 820 deliveries in 2025 and 2026, respectively.
These projections are significant as they suggest that commercial jet deliveries will eventually surpass the previous record of 806 units delivered in 2018, prior to the disruptions caused by the Covid-19 pandemic and the grounding of the 737 MAX. The grounding occurred worldwide between March 2019 and November 2020 after two fatal crashes raised concerns about the aircraft's flight control software.
Following this positive news, premarket trading of Boeing stock saw a rise of 1.7% to reach $211.48 per share. Meanwhile, futures for both the S&P 500 and Dow Jones Industrial Average remained stable.
With this analysis, it becomes clear that the outlook for Boeing's stock is on the upswing due to anticipated growth in commercial jet deliveries. As the market progresses, investors will closely monitor the company's ability to fulfill these delivery expectations and the resulting impact on its financial performance.
Boeing Analysts Give Buy Rating as Stock Gains Popularity
According to FactSet, approximately 76% of analysts now rate Boeing shares as Buy, surpassing the average Buy-rating ratio of stocks listed in the S&P 500, which stands at about 55%. The average analyst price target for Boeing is approximately $243 per share.
In September, Deuschle initiated coverage of Boeing with a Hold rating and a price target of $204. Prior to joining Deutsche, he rated Boeing shares as Hold while working at Credit Suisse earlier in the year.
Deuschle's recent change in rating reflects a broader trend on Wall Street. The popularity of Boeing has been steadily rising. In September, around 59% of analysts covering Boeing stock had a Buy rating. In recent weeks, that number has increased as six more Buy ratings were reported, according to FactSet.
Interestingly, the average price target in September was slightly higher at $256 per share.
Three years ago, during the peak of the 737 MAX grounding and the severe impact of Covid-19 on the aviation industry, only 43% of analysts rated Boeing shares as Buy. Back then, the average price target was approximately $228 per share.
As of Monday trading, Boeing stock has witnessed a year-to-date increase of around 9% and a 20% gain over the past 12 months.