Shares of Boeing (NYSE:BA) are under pressure again, thanks to some more self-inflicted wounds with the recent halting of the 787 Dreamliner. Add renewed COVID-19 delta variant fears into the equation, and you’ve got the perfect formula for a falling knife of a stock.
Today, shares of Boeing are bouncing back off its ominous July lows, ricocheting sharply from $206 to $226 and change, where the name currently sits today.
As investors grow increasingly frustrated with Boeing’s management team over the latest 787 Dreamliner issues, investors may have an opportunity to snag the plane-maker at a compelling discount, while the delta-driven wave of COVID-19 looks to peak, reverse and reignite interest in the reopening stocks.
Undoubtedly, Boeing will need a lot more than falling COVID-19 cases to get back to its highs. The company dropped the ball in a big way with the 737 Max debacle. This latest 787 Dreamliner fumble has likely proven to be the last straw for many investors who feel they have given given management more than enough of a chance to turn things around. (See Boeing stock charts on TipRanks)
Could CEO David Calhoun’s Days be Numbered?
The nose issues with the 787 Dreamliner couldn’t have come at a worse time for Boeing. The air travel industry is still struggling to climb back from the coronavirus crisis, and confidence in the business has yet to be restored following the extended grounding of the 737 MAX.
Indeed, it seems as though Boeing can’t do anything right these days. Plus, you can’t fault investors for throwing in the towel on a company that’s faced so many production problems.
It’s not just the company-specific issues that make Boeing stock a tough buy. Of late, the tides can’t seem to turn in its favor, with the horrific pandemic likely to drag out for another year due to COVID-19 variants of concern.
In due time, though, the tides will turn in favor of Boeing again. And once the tailwinds are at the company’s back, shares could be in for a steadier ascent. Until then, more turbulence is likely in the cards, as Boeing tackles the issues before the major airlines have enough confidence to really open up their wallets to update their fleets.
Wall Street’s Take
According to TipRanks’ consensus analyst rating, BA stock comes in as a Moderate Buy. Out of 17 analyst ratings, there are 8 Buy and 9 Hold recommendations.
As for price targets, the average Boeing price target is $269.82. Analyst price targets range from a low of $224 per share to a high of $307 per share.
787 Dreamliner Woes are not Devastating
The demand for wide-body aircraft could wane relative to narrow-body planes in the early innings of the COVID-19 recovery, given that domestic travel is poised to recover more quickly than international travel.
As such, the recent 787 Dreamliner hiccup is not nearly as devastating as recent action in the stock would suggest. There is more than enough time to solve the 787 Dreamliner issues—which are likely overblown—ahead of a wide-body demand surge. Will some orders be lost to top competitor Airbus as a result of recent fumbles? Sure, but probably not nearly as much as the bears think.
Over the medium-term, narrow-body aircraft like the 737 MAX could be in for a surge of orders even before the air travel industry reaches peak altitude. With shares of BA down 18% from 52-week highs, now may be a great time to take the role of a contrarian.
Disclosure: Joey Frenette owned shares of Boeing at the time of publication.
Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.