Boeing (BA) is an American multinational aircraft designer, manufacturer, and distributor. The stock has been under immense pressure due to COVID-19 lockdowns and safety issues with its 737 Max model.
Matters seem to be turning around for Boeing, which legendary investor Ray Dalio has taken note of. I am bullish on the stock. (See Analysts’ Top Stocks on TipRanks)
Ray Dalio’s Bullish Bet
The latest 13-F filing shows that Ray Dalio has added $2,722,637 worth of Boeing stock to his portfolio with a total portfolio composition of 0.01%.
According to TipRanks, Dalio manages more assets than 99% of hedge fund managers and also outperforms 57.36% of them.
Among other big names to have added the stock to their portfolio during the past quarter are Larry Foley of Bronson Point Management and Greg Poole of Echo Street Capital.
Issues Relating to Omicron and 737 Max
The new omicron variant has proven to be much less of a concern than initially thought. Although countries are closing borders, the narrative still remains that global travel lockdowns will remain transitory and limited to specific regions of the globe.
A few key statistics to outline the recovery in the airline space would be the U.S. air revenue passenger miles, which has increased by 24x since April last year, and a 1.022x increase in aerospace manufacturing demand.
Furthermore, safety issues regarding the company’s 737 Max jet are diminishing. South Korea has become the latest nation to lift the ban on the jet after the European Union also lifted theirs in January.
Over the past year, Boeing’s deliveries of the 737 have increased by 22x, and I expect further progress to be made moving forward with a subsequent contribution to the firm’s top-line earnings.
Key Metrics
After a stunning drawdown in sales during 2020, the firm’s revenue has recovered by 3.34% year-over-year. Analysts also expect EBITDA to surge by 217% over the next 12 months.
Boeing stock has value in abundance. Its current fair book value per share is 217.49, meaning the stock’s undervalued by approximately 10%.
Wall Street’s Take
In general, Wall Street analysts think the stock’s undervalued. Out of 16 Wall Street ratings, 13 have been assigned as Buys, and three have been Holds. The average Boeing price target among analysts is $270.80, presenting potential upside of 33.8%.
Concluding Thoughts
Dalio’s bullish bet on Boeing is well justified if we consider the recovery in air travel and the 737 Max model’s sales growth.
According to its fair book value, the stock is currently undervalued, and Wall Street analysts seem to agree.
Disclosure: At the time of publication, Steve Gray Booyens did not have a position in any of the securities mentioned in this article.
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