Is the tide finally turning for Boeing (BA)? Investors certainly gave the thumbs ups for the A&D giant on Tuesday, sending shares more than 7% higher after the company released June’s delivery numbers.
Representing Boeing’s best month since March 2019, the company delivered 51 passenger and cargo planes, bringing 1H22’s tally to 216 jets, a 38% year-over-year increase. Recall, March 2019 is when the second 737 MAX fatal crash took place, following which, the model was grounded for a year-and-a-half.
The excellent showing could indicate the company is set up well for a strong 2H, although the results are not much of a game changer for J.P. Morgan analyst Seth Seifman.
“June deliveries were strong but this was expected, and while we view the result as a plus, it won’t be easily replicated each month,” the analyst explained. “With potential for orders at next week’s Farnborough air show and the resumption of 787 deliveries likely approaching as well, we could envision Boeing sustaining some of the momentum we saw today, though our fundamental outlook is not much different.”
The delivery included 44 737s (43 MAXs), reflecting the “nominal” 31 per month production rate plus the company’s target of reducing inventory by 10-15 per month. The goal is to sustain the pace through the rest of the year but that is no easy feat, according to the analyst.
Seifman points out that a quarter’s final month usually generates strong deliveries, and therefore, going by seasonality, there should be a bit of a pullback in July. On average, Seifman’s expectation is for Boeing to deliver ~40 planes per month in the year’s latter half, which will result in ~450 deliveries for 2022. “Clearly, however,” wraps up the analyst, “there is risk here.”
All told, there’s no change to Seifman’s Overweight (i.e. Buy) rating, which goes along with a $188 price target. The figure suggests shares will add 28% over the coming months. (To watch Seifman’s track record, click here)
Most analysts agree with J.P. Morgan here; the stock boasts a Strong Buy consensus rating, based on 15 Buys vs. 3 Holds. The average target is more bullish than Seifman will permit; at $218.24, the figure represents one-year returns of 51%. (See Boeing stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
