Boeing Analyst Turns Bullish After Deep Sell-Off

Argus turned bullish on beleagured Boeing Co BA Friday and said the stock has taken a turn for better, primarily due to the value offered by the shares following their recent sell-off.

The Boeing Analyst

Argus analyst John Eade upgraded shares of Boeing from Hold to Buy, with a 12-month price target of $220. (See his track record here.)

The Boeing Thesis

Boeing has superior long-term prospects due to its significant backlog and strong presence in the growing commercial aerospace industry, Eade said in the Friday upgrade note. (See his track record here.)

Boeing shares have underperformed in the March quarter, dropping about 45% compared to the S&P 500's 23% decline. In March alone, the stock dipped to a low of $89 before doubling after the sell-off, the analyst said. 

The U.S. government is close to signing a federal rescue package that would provide at least $60 billion in aid for Boeing and its suppliers, he said. 

Among other developments, Eade said the company plans to restart 737 MAX production by May. The analyst said he expects U.S. regulators to clear the grounded plane for return to service by midyear.

The coronavirus emergency in Washington state forced closure of production operations at Boeing's Puget Sound facilities, but the company will be paid for the expected closure period of two weeks, Eade said.

Pressured for cash, the company drew down on its $13.8-billion credit facility in February, suspended its dividend and extended the pause in its stock buyback, the analyst said. 

"Given the production developments as well as the value now present after the sharp stock price decline, we think a BUY rating is warranted."

Boeing Price Action

Boeing shares were trading down 8.16% at $165.72 at the time of publication. 

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