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The Boeing Company (BA), based in Arlington, Virginia, is a major U.S. defense contractor and premier jet aircraft manufacturer. Valued at $101.3 billion by market cap, Boeing offers both commercial aircraft and a diverse array of defense products to domestic and foreign airlines, the U.S. Department of Defense, the Department of Homeland Security, NASA, other aerospace contractors, and various U.S. government and commercial communications customers.
Boeing has significantly underperformed the broader market over the last year. The stock has declined 31.5% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 15.1%. In 2024 alone, the stock has plunged 37.4%, compared to SPX's 9% gains on a YTD basis.
Taking a closer look, BA has also lagged behind the iShares U.S. Aerospace & Defense ETF’s (ITA) 16.4% return over the past year and a 7.8% rise in 2024.
Boeing's underperformance compared to the broader market stems from its massive cash burns, setbacks with the 737 Max and 787 Dreamliners, quality control and safety issues, component shortages, and regulatory constraints from an FAA directive.
Moreover, after initially rising 2% following Boeing's Q2 earnings release on Jul. 31, the stock has been on a downward trend. The company reported a wider quarterly loss and weaker revenue than expected and announced it will continue to burn cash in the current quarter due to ongoing struggles in its commercial airplane and defense programs.
For the current fiscal year, ending in December, analysts anticipate BA's loss to narrow by 34.9% to $3.78 on a diluted basis. The company’s earnings surprise history is mixed. It beat the consensus estimate in two of the last four quarters while missing the forecast on two other occasions.
Among the 23 analysts covering BA stock, the consensus rating is a “Moderate Buy.” That’s based on 15 “Strong Buy” ratings, one “Moderate Buy,” six “Holds,” and one “Strong Sell.”
This configuration is slightly more bullish than three months ago, with 14 analysts rating the stock a “Strong Buy.”
On Aug. 5, Bernstein analyst Douglas Harned lowered Boeing's price target to $207 from $222 but maintained an “Outperform” rating after the company's quarterly results. Bernstein expressed concerns about Boeing's cash flow issues, defense program losses, rising inventories, and slowing advances, despite an optimistic outlook for improved deliveries and production ramp-ups.
The emphasis was also on the challenges for incoming CEO Kelly Ortberg, who replaces Dave Calhoun on Aug. 8. The firm also highlighted Ortberg's potential difficulties due to his lack of internal knowledge and networks within Boeing.
The mean price target of $219.50 represents a 34.5% premium to BA’s current price levels. The Street-high price target of $270 suggests an ambitious upside potential of 65.4%.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
