It Looks Like This Time, the Turnaround at Boeing Is Real. Should You Buy BA Stock Now?

Since the start of the year, Boeing (BA) has been on an exhausting rollercoaster ride. In January, the stock rallied from about $217.74 to a high of $254.35 before diving to a low of $187.72 after the company discovered a manufacturing flaw that affected about 25 undelivered 737 MAX aircraft. While it didn’t pose safety risks to commercial or military fleets, deliveries for the impacted aircraft were temporarily paused. 

Unfortunately, that issue again raises the question of quality checks with the company. After all, who wants to get on a plane if they can’t trust it at 35,000 feet?

Since then, Boeing has managed to rally back to about $229 on news that the Department of Defense announced a partnership with the company to boost missile defense capacity. Plus, the company just posted better earnings with a narrow loss. 

Boeing Significantly Narrowed Its Losses

Despite recent issues, Boeing CEO Kelly Ortberg said the company expects to increase production of its 737 MAX aircraft to 47 from 42 a month. “All systems are go,” he told CNBC.

The company also reported key improvements across the business, and noted that its backlog reached a record $695 billion thanks to more than 6,100 commercial airplane orders. For its first quarter, adjusted EPS of $0.20 was far better than the estimates of $0.83. It narrowed its net loss to $7 million, or $0.11, from a loss of $31 million, or $0.16, year-over-year (YOY). Adjusted, the narrowed loss was $0.20. Revenue of $22.22 billion was also better than estimates of $21.78 billion.

Moving forward, the company expects to see positive free cash flow of between $1 billion and $3 billion. And it said the recent wiring issue will not impact its full-year delivery goals or plans to increase monthly production numbers.

While “all systems are go,” we wouldn’t buy just yet.

Analysts at Tigress Financial raised their price target on Boeing to $295 with a “Buy” rating, thanks to its massive backlog. However, while things seem to be moving in the right direction for Boeing, we wouldn’t race to buy the stock right now.

After rallying from about $187.72 to a recent high of $236.45 on April 24, the stock has become technically overbought and is just starting to pivot lower. Plus, if it breaks below its 50- and 200-day moving averages to the downside, it could potentially refill its bullish gap at around $210. Worst case, it could drop to refill its bullish gap at around $200.

What Do Analysts Say About BA Stock?

Of the 29 analysts covering the Boeing stock, 21 have a “Strong Buy” rating, three have a “Moderate Buy” rating, four have a “Hold” rating, and one has a “Strong Sell” rating. The mean target price of $268.96 implies 17.4% potential upside from current levels. Meanwhile, the high-end target of $305 implies as much as 17.4% possible growth from here.

While it’s easy to focus on Boeing’s past missteps, the company is clearly making meaningful progress, and the market is starting to take notice. From narrowing losses and improving cash flow outlooks to ramping production and building a record backlog, the underlying fundamentals are stronger. Yes, the stock may be a bit extended in the short term, and a pullback wouldn’t be surprising. But for longer-term investors, those dips could offer an attractive opportunity to step into a company that appears to be turning a very real corner.