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Shattering all pessimism, the S&P 500 Index ($SPX) soared 24.7% last year. The positive momentum has continued this year, with the SPX already up 8% on a YTD basis, despite a shaky performance this week amid reduced expectations for Fed rate cuts in the near term.
Recently, Wells Fargo (WFC) raised its year-end target for $SPX to 5,535, suggesting a 6.5% upside from current levels, while also revising its full-year EPS estimate for the index to $242 from $235 predicted earlier.
However, not all S&P 500 stocks have fared so well in 2024. The Boeing Company (BA) and Tesla, Inc. (TSLA), two major players in their respective industries, have experienced steep stock price declines this year, and are among the worst-performing SPX components based on YTD returns.
For investors looking to buy the dip, which underperformer do analysts like better? Let's find out.
The Case For Tesla Stock
Texas-headquartered Tesla, Inc. (TSLA), with a market cap of $556 billion, designs and manufactures fully electric vehicles (EVs), solar energy generation solutions, and energy storage devices. Plus, Tesla increasingly emphasizes offerings centered around artificial intelligence (AI), robotics, and automation.
Tesla has generated staggering returns for shareholders since its initial public offering (IPO) in 2010, and the stock is up 1,159% in the past 10 years alone. However, after a strong performance in 2023, TSLA’s shares have been under pressure this year.
With a YTD loss of 31%, Tesla stock is significantly lagging behind the S&P 500 Index over the same time frame. Moreover, Tesla has lost more than 42% of its value from the 52-week high of $299.29.
The stock currently trades at 77.92 times forward earnings and 5.65 times sales – both higher than the industry averages of 15.31x and 0.92x, respectively. However, the multiples are lower than TSLA’s own 5-year averages of 117.53x and 10.86x, respectively.
Tesla's Delivery Woes Persist
This week's pop aside, there hasn’t been much reprieve for investors – and the company’s lower-than-expected Q1 delivery numbers sent TSLA stock down 4.9% on Apr. 2. Tesla's deliveries slumped to 387,000 vehicles, marking its first annual drop since the onset of the COVID-19 pandemic in 2020.
Tesla reported Q4 earnings of $0.71 per share on Jan. 24, 5% below the Wall Street estimates, on sales of $25.2 billion, which grew 3% year over year but missed forecasts by $25.8 billion. The company ended the quarter (and fiscal 2023) with $29.1 billion in cash, cash equivalents, and short-term investments, up 31% annually. The EV giant is expected to report earnings on Apr. 23 after market close for the fiscal quarter ending Mar. 2024.
Analysts tracking Tesla expect the company to report a profit of $2.20 per share in fiscal 2024, down 15.4% year-over-year, and $2.98 for fiscal 2025, up 35.5%.
Analysts have grown cautious on Tesla stock. Last month, Wells Fargo analyst Colin Langan downgraded Tesla stock from “Equal Weight” to “Underweight” and slashed the price target to $125 per share from $200.
TSLA has a consensus “Hold” rating overall, compared to a "Moderate Buy" rating three months ago. Out of the 29 analysts covering TSLA, six have “Strong Buy” ratings, two recommend “Moderate Buy,” 16 have a “Hold,” and five suggest “Strong Sell.”
The average price target of $195.26 indicates a relatively modest upside potential of approximately 13.8% from current levels. However, the high price target of $310, freshly cut by analysts at Morgan Stanley (MS) in April, suggests that the stock could rally as much as 80% from current levels.
The Case For Boeing Stock
Boeing (BA), with a market cap of $105.7 billion, is an aerospace powerhouse headquartered in Arlington, Virginia. Known for aircraft like the 737, 747, and 787 Dreamliner, Boeing's market dominance makes it a leading force in the global aerospace industry, driving substantial growth and giving it a competitive edge.
Shares of Boeing have dropped 34.5% on a YTD basis, lagging significantly behind the SPX's return
Valued at 1.37x sales, Boeing is now cheaper than some of its aerospace and defense peers, including Airbus (EADSY) and Lockheed Martin (LMT).
Boeing Beats Q4 Revenue Projections and Reduces Losses
The company reported its Q4 results on Jan. 31, with revenue rising 10% to $22 billion, surpassing Wall Street projections by 4.5%. Boeing narrowed its net loss to $30 million, with a core loss per share of $0.47, surpassing analysts' estimates by 34.7%. Its new jetliner deliveries rose slightly to 157, recording 611 net orders of commercial airplanes.
However, Boeing refrained from providing its own forecast for 2024, citing uncertainty following an incident in which an Alaska Airlines-operated 737 Max 9 experienced a midflight blowout of a panel known as a door plug on Jan. 5.
Just days after the incident, on Jan. 9, Rep. Blake Moore (R-Utah), who sits on the House Budget and Ways & Means Committees, sold BA shares worth up to $15,000, according to Quiver Quantitative data. On Feb. 28, Rep. Bill Keating (D-Mass.), a member of the Armed Services and Foreign Affairs Committees, sold Boeing shares worth up to $15,000.
Analysts tracking Boeing expect the company to swing to a profit of $0.75 in fiscal 2024 from the fiscal 2023 loss of $3.67 per share, with EPS growing further to $6.12 in fiscal 2025.
Amid ongoing whistleblower reports and a CEO shakeup, several analysts have revised Boeing's share price target, with Bank of America (BAC) being the latest in April. BofA reduced the stock's target to $190 from $210 and maintained a "Neutral" rating on the stock. Also, Bernstein's Douglas Harned reduced Boeing's price target by 11.8% to $240 on Apr. 8 while maintaining a "Buy" rating.
However, BA still has a consensus “Moderate Buy” rating overall, compared to a "Strong Buy" rating two months ago. Out of the 21 analysts covering BA, 14 have “Strong Buy” ratings, one recommends a “Moderate Buy,” and six suggest “Hold.”
The average price target of $247.95 indicates an upside potential of more than 45% from current levels. The high price target of $300 suggests that the stock could rally as much as 76.3%.
TSLA vs. BA: Which Stock Do Analysts Prefer?
Analyst opinions do not look promising for TSLA, given the stock's consensus “Hold” rating and moderate upside potential, based on the mean price target. Therefore, investors may approach TSLA with caution.
Conversely, Boeing's prospects appear to be relatively promising due to persistent demand in commercial aviation and space exploration. While recent setbacks - primarily, the 737 Max grounding and reports of systemic manufacturing issues - have tarnished its reputation and financial standing, Wall Street seems to think its duopoly will emerge mostly unscathed. Based on the “Moderate Buy” consensus rating and upside potential, it looks like analysts prefer Boeing over Tesla at current levels.
On the date of publication, Sristi Suman Jayaswal 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.
