“Financial engineering.” That is the unexpected two-word phrase that cropped up when National Public Radio (NPR) took a look at Boeing (BA) to determine what went wrong at the aircraft manufacturer. The idea is fairly simple, but has wide-reaching connotations.
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The NPR report examined the Boeing situation and discovered that the aforementioned “financial engineering” was much of the cause of Boeing’s problems. While the term sounds complex, what it means is that Boeing focused more on making money than on making airplanes.
This might sound counterintuitive, but the report noted that there is a point at which you focus so much on making money that you fail to maintain quality, and that hurts the long-term ability of a company to grow and thrive.
Flights to Nowhere
Separately, two Boeing went nowhere recently. A KLM flight departed Amsterdam, heading for the capital of Suriname, Paramaribo. But after two hours flight time, the plane turned around and returned to Amsterdam due to what was described as a “small leak.”
Another report noted that a similar incident happened on a flight from Chicago to Las Vegas. The flight ultimately had to backtrack after “multiple door warning light indications.” However, this was repaired quickly and the flight still managed to reach its destination on time.
Is Boeing a Good Stock to Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on BA stock based on 15 Buys, six Holds and two Sells assigned in the past three months, as indicated by the graphic below. After a 33.5% loss in its share price over the past year, the average BA price target of $193.38 per share implies 23.86% upside potential.
