Boeing stock is taking off after an encouraging weekend labor deal and the safe touchdown of its Starliner space capsule. BA stock, which closed at a 22-month low on Friday, led the Dow Jones Industrial Average higher in early Monday stock market action.
Both developments are "wins" for new Boeing CEO Kelly Ortberg and significantly reduce risk, BofA analysts wrote. For now, they're keeping their 200 BA price target and neutral rating unchanged, noting that the labor contract still requires worker approval on Sept. 12.
Boeing Labor Deal
Leadership of the International Association of Machinists and Aerospace Workers district representing 33,000 Seattle-area Boeing workers endorsed the deal.
JPMorgan analysts said the tentative agreement suggests the company appears more likely to "avoid a prolonged strike that Boeing cannot afford." Even if workers vote down the agreement, incremental concessions could close the deal. JPMorgan kept an overweight rating and 235 price target for BA stock.
Deutsche Bank analyst Scott Deuschle wrote that the "contours of the deal are broadly similar to other recent industrial union deals," with a 25% wage increase over four years and $3,000 ratification bonus. However, the terms are better than Deuschle expected, given "the deep scar tissue that exists between Boeing and its machinists union members."
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Starliner Landing
The Starliner capsule returned to Earth just after midnight on Saturday, more than three months behind schedule and without its two-astronaut crew. NASA had judged that returning the astronauts via the Starliner was too risky after it encountered thruster problems. NASA said the astronauts would have arrived home safely. However, they'll be brought home from the International Space Station by a SpaceX capsule next year.
BofA opined last month that Boeing may end up divesting its manned space flight business.
JPMorgan upgraded Boeing on Aug. 1 on expectations of ramping 737 and 787 deliveries. Still, Boeing faces a tough cash flow outlook and increasing likelihood of a need to issue more shares to raise cash.
BA Stock Takes Off
Boeing stock rose 3.4% early Monday. Last week, Boeing slid 9.3% to 157.62, its lowest close since Nov. 4, 2022.
Year to date, Boeing has slumped 39.5%, making it the second-worst performer among the Dow Jones 30.
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