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How Wall Street Views Boeing at the End of 2018

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Bullish stance

Wall Street analysts have provided a consensus “buy” recommendation with a consensus ~1.92 rating for Boeing (BA) stock. About 75% of the analysts covering BA have provided bullish recommendations on the stock.

Eight of the 24 analysts covering BA have provided a “strong buy” recommendation on the stock while ten have given it “buy” recommendations. The remaining six analysts have given it “hold” recommendations. Analysts’ target price of $417.60 represents a whopping ~42% potential increase from its current price of $294.16.

Since Boeing reported its third-quarter results on October 24, the stock has received upward earnings estimate revisions for its 2018 and 2019. The mean estimate for its 2018 EPS has risen to $15.14 from $14.65 on October 23. Its 2019 EPS estimate has improved to $18.21 from $17.85.

Cowen aerospace analyst Cai von Rumohr has named the company his number-one stock pick for 2019. In a note to clients on November 29, Rumohr said, “Most investors miss the power of BA’s favorable production environment and potential to deliver extended cash flow ramp,” CNBC reported.

Von Rumohr believes Boeing “is in a production sweet spot” that’s driving its robust cash flows. He said, “Given visibility of a seven-year backlog and still-solid traffic growth, it would take a sharp economic slowdown to disrupt the favorable current production outlook.”

He believes that—given the current favorable product environment, increasing airline traffic, and over seven years of backlog—Boeing is poised for growth amid strong quarterly results in 2019.

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Peers’ ratings

Analysts are bullish on the entire industrial sector (XLI) and have provided “buy” recommendations on Lockheed Martin (LMT), General Dynamics (GD), and Raytheon Company (RTN). Their one-year target prices of $360.89, $211.78, and $217.71, respectively, represent potential returns of 47.2%, 42.9%, and 48.4%.

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