Boeing stock rallied early Tuesday on yet another upgrade, as RBC Capital notched shares to outperform from sector perform, and set the stock's 12-month price target 25% above where shares ended on Monday.
Boeing shares are up 15% since the start of the year, despite spending the last nine months in consolidations. The Dow Jones transports leader also received an upgrade to buy from neutral from Deutsche Bank on Nov. 20. Goldman Sachs had added Boeing to its conviction buy list at the start of the month.
That helped boost the stock to a November gain of more than 17% through Monday, turning around a three-month decline.
The RBC note saw the aircraft maker's stance as positive heading into 2024. 2023 ended up being another year of supply chain disruptions, which lowered expectations. The company is poised for production ramps on both the commercial and defense sides of the business, and expects firm demand in both segments.
RBC believes "we are in the early stages of a significant shift in sentiment on BA stock," according to reporting from thefly.com.
A Buying Opportunity
Both Boeing and rival Airbus have been hammered by complications throughout the year, particularly regarding supplier Spirit AeroSystems. Spirit workers went on strike earlier this year before reaching a new compensation deal in June. Meanwhile, quality defects with Spirit's fuselage systems have curbed Boeing's 737 production, which already suffered from supply chain issues during the pandemic. Some of the issues included misdrilled holes in the aft fuselage bulkhead of the 737, Boeing's bestselling jet.
Boeing lowered its 737 delivery target on Oct. 25 to range from 375 to 400 jets this year, from its previous guidance of 400 to 450 aircraft. The Dow Jones giant delivered a total 405 airplanes this year through Oct. 31, according to the company website.
Deutsche Bank based its Nov. 20 upgrade on the reacceleration of aircraft deliveries.
The jet maker dominated the new order book at the Dubai Airshow, ended Nov. 17. Deutsche Bank saw Boeing sustaining the improved performance, the momentum from which should translate to positive free cash flow revisions. That, in turn, should drive positive share response, the note said.
Goldman Sachs upgrade note said investors had become more focused on near-term disruption risk, losing sight of long-germ fundamentals and normalizing cash flow. That created what Goldman described as a buying opportunity "in this domestic half of the global aircraft manufacturing duopoly."
Boeing Stock
The November rally lifted the Dow Jones heavyweight past the midpoint of an 18-week cup base. Boeing stock looked as through it might shape a handle, but Tuesday's early jump squelched that effort. The stock settled back to a 0.2% gain shortly after the open.
The cup base has a 243.20 buy point — more than 10% above where shares closed on Monday.
Boeing rival Airbus, which trades in the U.S. and American depositary receipts, is much closed to is buy point. The stock has formed a double-bottom base with a buy point at 36.73. Shares closed at 36.54 on Monday. Jeffries upgraded Airbus to buy from hold in mid-October. Airbus stock rose 1% Tuesday.
