The worst has been priced into shares of Boeing (BA).
After plunging to a low of $90.35, Boeing has exploded to $229, and could soon retest a prior high of $340. Analysts appear just as bullish, with Seaport Global initiating coverage of the stock with a buy rating, and a target price of $277.
“What’s not being reflected in the stock is that: 1) BA’s ‘normal’ FCF could peak at >$18/shr or higher; 2) the likelihood BA’s P/FCF multiple expands to 15-17x as investors start discounting mid-cycle vs. late cycle currently; and 3) there are risks ahead, however, absent another COVID-19 wave, we think the worst is now being priced in. Our current view on BA represents an improvement versus our view in our May 18th Defense initiation “Buy Defense – a good entry point for an underappreciated growth story,” said the analyst, as quoted by Street Insider.
Goldman Sachs also raised its price target on Boeing from $209 to $238 with a Buy rating.
Not only is Boeing rebounding with air travel demand, it’s running on news airlines are not cutting deliveries as much as Boeing is cutting production, says Goldman Sachs, as noted by Investor’s Business daily.
“We are positively surprised to see these 30 customers have only revised their 2020 + 2021 plans by 17%,” they wrote. “This is less than the production cuts Boeing & Airbus have announced. And far less than we assume the market fears.”