Now Is A Great Time To Buy This Dow Member

Bernstein says Boeing shares are showing positive signs.

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A note to clients on Tuesday said that analysts Douglas Harned, who has an outperform rating on the stock, continues to hear skepticism about the stock now that its shares are more expensive. However, we are still able to see that Boeing is an attractive investment at the moment when we compare its current situation with its history over the past twenty years.

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During three periods from April 2004 to April 2007 when the aircraft stock outperformed its peers, Harned claimed. In other words, between December 2012 and April 2015, June 2016 and February 2019, Harned said. In each of these periods, there was a common theme: global airline traffic was on the rise, delivery outlooks were showing a strong growth outlook, and free cash flow was expected to rise, but investor sentiment was negative at the time.

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His perception of those themes is the same as it was then. Harned has said the estimate for the company’s March deliveries is “strong,” despite the fact that the 737 Max backlog is seven times larger than the company’s projected delivery rate by 2025. Increasing the number of planes the company can distribute should be possible if engine deliveries stabilize.

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The company also announced Tuesday that it delivered 64 aircraft to its customers in March, as many as it has delivered since December.

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It has a history of Boeing stock following free cash flow specifically, Harned says. Even though the stock has risen since last fall, Harned believes that there is still a lot of upside left in the stock.

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According to Harned, his new price target for the stock is $252 from $240, which indicates that it could gain 19.6% from where it closed on Monday.

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Throughout 2023, this Dow Jones Industrial Average component has gained a total of over 11%, making this the best-performing stock in the Dow, which has also posted the highest growth rate in January. This stock has outperformed both the Dow and the S&P 500, which have made about 1.7% and 7% gains during March respectively.

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During the early days of Boeing's stock, when investors are looking at it, it is often darkest before the dawn, Harned said. "But once the cash flow gets underway, however, the shares start to pick up the momentum that is remarkable."

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Despite this, the analyst noted that the company is currently facing challenges related to its supply chain, its ability to compete in the market, and its ability to access China, among other things. According to him, the company’s free cash flow goals in 2025 and 2026 could also be hampered by defense issues, which could also hamper those goals. It is also important to note that Harned said that the company still has a debt problem, but it should be able to pay down some of its debt within the next three years.

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