The infamous 737 Max jets manufactured by The Boeing Co. (NYSE: BA) received an all-clear from Hong Kong authorities, allowing Hong Kong-based airlines to resume the aircraft’s usage. Following the news, shares of the global aircraft behemoth fell 4.1% to close at $205.44 on January 21.
Hong Kong Authorities Lift Ban
Hong Kong’s Civil Aviation Department (CAD) on Friday lifted its three-year-long ban on the usage of Boeing’s 737 Max jets. The city had banned the usage of 737 Max jets after a fatal crash in Ethiopia in 2019, which killed 157 souls onboard.
According to Victor Liu, the director-general of CAD, airlines that plan to use the 737 Max jets in Hong Kong’s airspace and to international destinations need to follow an airworthiness compliance directive, either from the U.S. Federal Aviation Administration (FAA), or similar compliance from the country where the plane was registered.
Additionally, the directive also requires the carrier to carry a valid airworthiness certificate that complies with Civil Aviation Organization standards.
Recently, Boeing stock jumped on the news of the possible return of the 737 Max to China skies, as China is one of the biggest markets for the aircraft maker. The increased usage of the 737 Max will increase the potential revenue earning opportunity for Boeing. The company awaits clearance from several other countries who grounded the aircraft on similar safety concerns.
Analysts’ Take
Recently, Citigroup analyst Jonathan Raviv lowered the price target on the BA stock to $238 (15.8% upside potential) from $240, while maintaining a Hold rating.
Some of the Top Analysts from Wall Street have awarded the stock with a Strong Buy consensus rating based on 13 Buys and 4 Holds. The average Boeing price target of $267.33 implies 30.1% upside potential to current levels. Shares have gained a modest 1% over the past year.
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