Is It Time To Reconsider Boeing (NYSE: BA)?

Boeing's stock has plummeted over 30% in the last six months, yet despite this drop, recent trading sessions show signs of an uptick. With Boeing's strategic position in the aviation market and a substantial backlog of orders, could now be the time to buy this aerospace giant's stock? 

A Year of Challenges for Boeing

Boeing has experienced severe turbulence in 2024. The stock started the year at $260.66 and fell to $178.39 by mid-June, a staggering 31.6% drop. Several issues have plagued Boeing, most notably quality control problems that led to significant delivery delays. 

In Q1 2024, Boeing reported a revenue decline of 15%, with a net loss of $1.2 billion. However, the company's backlog of 5,625 airplanes remains a beacon of hope, and hitting delivery targets is crucial for improving margins and profitability.

Key Considerations for Boeing Investors

• Labor Negotiations: The aerospace sector faces a skilled labor shortage, and union demands for significant pay raises could strain Boeing's finances.
• Supplier Issues: Boeing's crucial supplier, Spirit AeroSystems, is financially unstable. Boeing advanced $425 million to support Spirit, which could become a recurring financial drain.
• Leadership Uncertainty: CEO David Calhoun will step down at the end of the year, and no successor has been announced. A strong new leader is needed to boost investor confidence and drive a turnaround.

Boeing's Potential for Profit and Growth

Despite the challenges, Boeing has shown resilience. Analysts have mixed sentiments, but some see potential for significant growth. For instance, the forecast for Boeing 787 deliveries is expected to increase from 73 in 2024 to 100 in 2025 and 120 in 2026. Additionally, Boeing secured a $7.5 billion JDAM award through 2030, providing a long-term revenue stream.

Current analyst price targets for Boeing range from $140 to $275, with an average target of $220.89. This suggests a potential upside of around 23.8% from the current price. 

Analysts project Boeing's free cash flow to reach $10 billion by 2026, trading at 11.1 times FCF, indicating a possible undervaluation at current levels.

Balancing Boeing's Potential and Current Volatility

Boeing's strategic market position and substantial order backlog are positive indicators, but the company faces significant short-term challenges. Labor disputes, supplier financial instability, and leadership uncertainty weigh heavily on Boeing's recovery prospects. Current analyst sentiment is cautious, with many advising to hold off on buying until these issues show signs of resolution.

Neither Sean Kelland nor Stocks.News have positions in this company.