Boeing
stock took a break on Monday from its recent tear, but resumed the upward trajectory on Tuesday. Things are looking up for the commercial aerospace giant. German airline
Lufthansa
announced it’s buying 100 MAX jets. That sizable order isn’t the main reason why the stock is up, though.
Boeing stock was up about 1.4% in midday trading Monday while the
S&P 500
and
Dow Jones Industrial Average
were up 0.4% and 0.5%, respectively.
To be sure, orders don’t hurt. Lufthansa’s order for 737 MAX jets is the first single-aisle order from the company in about 30 years. Boeing has a backlog of some 5,300 jets, including more than 4,000 737 model jets.
That’s a lot of work to finish. Boeing is expected to deliver about 520 jets in 2023, and the most productive year for Boeing ever was about 800 jets delivered in 2018.
The main reason Boeing stock is rising is that Wall Street price targets keep going up. Monday evening, BofA Securities analyst Ronald Epstein took his Boeing stock price target to $275 from $250. He rates shares at Buy.
“We continue to expect Boeing to generate $15 free cash flow per share by 2026,” wrote Epstein. “We raise our price [target] to reflect a cyclicals’ rerating as the market prices an easing interest rates environment.”
Part of the reason for a higher target is the outlook for interest rates. He also sees MAX jet production improving. Boeing is likely to make more than 30 a month in December, and has plans to ramp up to 38 a month in 2024. Through November, Boeing delivered 343 MAX jets in 2023, or about 31 a month, but some of those are still coming from inventory.
Boeing built and parked hundreds of MAX jets while the plane was grounded worldwide from March 2019 to November 2020 following two deadly crashes.
Epstein isn’t alone in boosting his price target for Boeing shares. The average price target has risen about $15 over the past month to $265 from about $250.
Wall Street is feeling better about the ongoing commercial aerospace recovery, and is also considering rising 2025 and 2026 estimates from 2024 when evaluating Boeing stock.
Rising price targets have been a tailwind for shares. Through midday trading Tuesday, Boeing stock was up about 12% in December, about 7 percentage points better than the
Nasdaq Composite.
Shares have gained 11 days and fallen twice so far in December.
Write to Al Root at [email protected]
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