Market News

Boeing Jan. Deliveries Double As 737 MAX Returns To The Skies

Boeing handed over 26 of its aircraft during the first month of the year, while new orders started to pick up following the return of its 737 MAX back to the skies.

Boeing’s (BA) January delivery numbers doubled from the 13 jets that were handed over during the same month last year. This year’s deliveries included 21 of Boeing’s 737 aircraft, which had been grounded for a 20-month period, following two fatal crashes.

Additionally, the plane maker last month recorded 4 new orders for its 747-8 freighters from Atlas Air Worldwide Holdings. The year-to-date orders net of cancellations and conversions amounted to negative two.

Boeing’s aircraft deliveries more than halved last year as the coronavirus pandemic brought air travel demand to an almost complete halt. During the fourth quarter of 2020, the US plane maker handed over 59 jets to customers, out of which, 39 were delivered during the month of December.

Coming now to BA’s performance, shares have seen some recovery. The stock is up 14% over the past three months after plunging 38% over the past year as COVID-19 travel restrictions have resulted in a deep cut in the number of commercial jet orders. (See BA stock analysis on TipRanks)

On Jan. 28, Merrill Lynch analyst Ronald Epstein reduced the stock’s price target to $210 from $230 and reiterated a Hold rating, citing continued execution issues and lower deliveries of widebody aircraft.

The “recent return to the air of the 737MAX are expected to support strong Boeing relative valuation multiples (despite pressured near term operations). We think the market will continue to value Boeing on a normalized post-pandemic and postprogram issues FCF generation of $12/share,” Epstein commented.

“However, there remain some company specific challenges ahead. Boeing is confronted with losing market share in the narrow body jet market, refocusing the company on engineering excellence and deleveraging its balance sheet,” the analyst argued.

The rest of the Street is mostly in line with Epstein’s outlook. The Hold consensus rating shows 9 Holds, 4 Sells, and 9 Buys. That’s with an average analyst price target of $231.26, indicating 7.5% upside potential lies ahead over the coming 12 months.

On TipRanks’ Smart Score, Boeing gets a 1 out of 10, which implies that the stock has a strong likelihood to underperform market averages.

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