Wall Street Has No One Selling Boeing Anymore! After Years of Struggle, the Turnaround Moment Has Finally Arrived

Wall Street's confidence in Boeing's (BA-US) recovery is clearly rising, with the ratio of analysts giving buy ratings reaching the highest since October 2022. Among the 32 analysts tracked by Bloomberg, no one is currently recommending selling Boeing stock, indicating that market sentiment is shifting from past concerns and observation to a more positive direction.

Argus Research and BNP Paribas have both upgraded Boeing's ratings in a short period, becoming an important signal of the market's shift in sentiment. Ivan Feinseth, the investment chief and research manager at Tigress Financial, stated that after years of struggle, "now is Boeing's time to shine," and gave a buy rating and the highest target price of $305 on Wall Street.

737 Max 7 certification is a key milestone in the recovery

Analysts are turning optimistic as Boeing obtained the certification for the 737 Max 7 from the U.S. Federal Aviation Administration (FAA) last week, ending a nearly decade-long review process that was delayed by two fatal crashes and aircraft quality issues. Stephanie Pope, the executive vice president of Boeing's commercial airplanes division, described the certification as a "critical moment" in the company's recovery process.

Over the past few years, Boeing has faced crises such as the 737 Max crashes, the COVID-19 pandemic's impact on air travel demand, and the mid-flight cabin door detachment. These events have made investors less likely to believe the company's recovery promises, and they are now waiting for concrete evidence of improvements in production, deliveries, and cash flow.

However, these signs are beginning to emerge. Boeing reported strong financial results last month, with free cash flow far exceeding market expectations. Kristina Ruggeri, an analyst at Argus, upgraded her rating from "hold" to "buy" based on the expectation of a significant increase in production volume. Joe Gilbert, a portfolio manager at Integrity Asset Management, noted that the market has been waiting for Boeing to prove its execution capability, and the results are now starting to show.

Matthew Akers, an analyst at BNP Paribas, was the only one in the market to give Boeing a rating equivalent to "sell," but he also changed his stance last week, believing that the period of uncertainty after the pandemic has ended, and gave one of the highest target prices in the market. He expects that the market's valuation of Boeing's free cash flow has been overly downgraded, and future forecasts are likely to gradually recover, with the stock price having the potential to nearly double by 2030.

Aircraft demand is strong, but valuation still awaits performance verification

In addition to internal operational improvements, Boeing and Airbus jointly dominate the global large commercial aircraft market and are expected to benefit from the aircraft demand boom and increased defense spending in various countries over the next few years. Analysts estimate that Boeing's free cash flow for this year will be approximately $24.4 billion, but it is still far below the $136 billion in 2018. The estimated loss per share is $0.83, compared to a profit of $16.01 per share in 2018, indicating that the company still has a way to go to fully recover.

Boeing's stock price has only risen about 6% so far this year, lagging behind the market's 13% gain, while its competitor Airbus has risen about 8% in the same period. Currently, Boeing's stock price is approximately 1.7 times the estimated revenue for the next 12 months, which is higher than the 10-year average of 1.5 times, also meaning that some recovery expectations may already be reflected in the valuation.

Compared to the historical high of $440.62 in March 2019, Boeing's stock price has fallen nearly 50% since then. During the same period, the S&P 500 index has risen approximately 180%, the Dow Jones Industrial Average has doubled, and Airbus's stock price has also risen nearly 90%. Eric Diton, president of Wealth Alliance, stated that it may still be too early to call Boeing's "new era," but after years of difficulties, the company's shift to positive momentum in 2024 is clearly visible.