Boeing Trading Higher After Bernstein Upgrade
Dow component Boeing Co. (BA) is trading higher by nearly 3.0% in Wednesday’s pre-market after Bernstein upgraded the aerospace giant from ‘Market Perform’ to ‘Outperform’. Analyst Douglas Harned also raised the firm’s price target from $252 to $279, just above the median of 24 analysts covering the stock. The long anticipated travel rebound drove the upgrade, even though most corporations have delayed plans to resume business travel due to the Delta variant.
MAX Flights Awaiting Chinese Approval
In addition, the company hopes to receive approval from Chinese authorities to resume MAX 737 flights after that nation’s aviation regulator conducted a successful test flight last month. Company spokesman Sherry Carbary recently sounded upbeat, noting she was “encouraged about how closely they are working with us” while U.S. Commerce Secretary Gina Raimondo took a more pessimistic stance, complaining that China is standing in the way of “tens of billions of dollars” in domestic purchases.
Boeing has underperformed the Dow Jones Industrial Average by a wide margin so far in 2021, posting a mediocre 4.5% return when Wednesday’s pre-market gains are added, compared to the Dow’s 12% return. The stock has also been rangebound and grinding sideways at the 200-day moving average for nearly 11 months, highlighting a holding pattern that reflects ongoing uncertainty about the pandemic’s long-term impact on business and recreational travel.
Wall Street and Technical Outlook
Wall Street consensus is mixed, yielding an ‘Overweight’ rating based upon 11 ‘Buy’, 3 ‘Overweight’, and 8 ‘Hold’ recommendations. In addition, two analysts recommend that shareholders close positions. Price targets currently range from a low of $191 to a Street-high $314 while the stock will open Wednesday’s session more than $50 below the median $277 target. That price level matches the top of the 2021 trading range but is unlikely to be reached in the next six months due to fears of a winter wave.
Boeing sold off more than 350 points between March 2019 and March 2020, pounded to dust by the MAX 737 grounding and first pandemic wave. It recovered just half of that downside into the March 2021 peak at 278.57 and rolled into a pattern of lower highs and lower lows that have found support near 200. Accumulation has fallen steadily since hitting a six-month high in December 2020 and is now stuck near a 13-month low, likely to limit gains until pandemic fears recede.
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Disclosure: the author held no positions in aforementioned securities at the time of publication.