Boeing's badly beaten-up stock might be nearly as weak as it will get.
"The decline in Boeing's stock price has prompted continued questions frominvestors," wrote J.P. Morgan analyst Seth Seifman in a Tuesday note. The fact that investors are looking at the stock again after a significant decline is a positive sign.
Coming into Tuesday trading, Boeing (ticker: BA) stock is down about 38% so far this year. The shares have fallen about 26% since management released first-quarter results that missed Wall Street's expectations, partly because of charges taken in the company's defense business.
Amid the turmoil, Seifman says, the big job for Boeing management as unchanged. They need to hand over more 737 MAX jets to customers and win permission to resume deliveries of the 787 twin-aisle jet. "This will help generate cash, reduce working capital, and begin the de-levering process," Seifman wrote. He believes any other problems the company faces will look smaller once deliveries ramp up.
The MAX returned to commercial service in November 2020 after about 20 months on the ground following two deadly crashes inside of five months. Boeing delivered 83 model 737 jets in the first quarter, most of them 737 MAX jets. Boeing delivered 173 model 737 jets in the fourth quarter of 2019, before the MAX problems and pandemic.
For MAX deliveries to ramp up, China needs to reapprove the plane for commercial service. The authorities in Beijing are one of the last, if not the last, to recertify the MAX. And the Federal Aviation Administration needs to certify the larger version of the MAX—the 737 MAX 10 —for commercial service. That could happen late in 2022.
Boeing delivered no 787 jets in the first quarter because quality problems were found during assembly. The FAA is reviewing Boeing's plans to correct any issues; the regulator's approval is really the only factor standing in the way of restarting 787 deliveries.
Those are the key points Seifman is watching. He rates Boeing shares at Buy, with a target of $190 for the price.
Overall, 81% of analysts covering the stock rate shares at Buy. The average Buy-rating ratio for stocks in the S&P 500 is about 58%. A year ago, only 53% of analysts covering the stock rated shares at Buy.
But although analysts have gotten more positive, investors seem to still have doubts. The stock is down about 48% over the past year, falling from about $237 to about $124 a share.
These days, the average analyst price target for Boeing stock is about $224 a share. A year ago, the average target price was $264 a share.