Analysts See More Upside in Boeing’s Share Price



Bullish stance

Boeing (BA) has received a consensus “outperform” recommendation from the analysts polled by Reuters. Among the analysts, 79% provided bullish recommendations on the stock. Among the 24 analysts covering Boeing, nine recommended a “strong buy,” ten recommended a “buy,” and five recommended a “hold.”

Since Boeing reported its fourth-quarter results on January 30, it has seen upward estimate revisions for its EPS in 2019 and 2020. The mean estimate for Boeing’s 2019 EPS has been revised upward to $20.21 from the estimate of $18.31 on January 29. The company’s 2020 EPS estimate has improved to $23.36 from $21.45.

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Higher target price

In the last few weeks, various analysts have provided glowing remarks for Boeing. Analysts raised their target prices on the stock. On February 28, Morgan Stanley (MS) and UBS reiterated their “buy” ratings and increased their respective target prices.

Reiterating his “overweight” rating, Rajeev Lalwani of Morgan Stanley increased his target price on Boeing stock to $500 from $450. The analyst outlined various positive factors behind his optimism including a stable commercial aerospace backdrop, a potential China trade resolution, a healthy free cash flow yield, Boeing’s new mid-sized plane launches, and a rate hike for 737 series models.

UBS analyst Myles Walton also raised his target price on Boeing to $525 from $500. Walton thinks that Boeing is progressing well with its 777x development program. The analyst is more comfortable in his model estimates for 2019.

On February 11, Seth Seifman of JPMorgan Chase (JPM) raised his target price on Boeing to $450 from $425 due to the improved outlook for its FCF (free cash flow) in 2020. Seifman thinks that Boeing will have an FCF of $16.3 billion, or $30 per share, in 2020. He thinks that the company is well positioned to benefit from positive aerospace fundamentals.

Boeing shares have gained 34.2% and significantly outperformed the return of the Industrial Select Sector SPDR ETF (XLI), which has risen 11.4% during the same period. Lockheed Martin (LMT) and General Dynamics (GD) have risen 16.4% and 6.1%, respectively.


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