Why Boeing Stock Is Under Pressure Today

FAA Reportedly Tells Boeing That 777X Would Not Be Certified Until 2023

Shares of Boeing found themselves under pressure after FAA reportedly stated that the company’s 777X jet would not be certified until 2023.

Previously, problems with software in two Boeing 737 MAX planes have led to crashes, so the market is sensitive to any news about issues with Boeing aircraft.

The 777X program has already suffered delays due to the pandemic, and it remains to be seen whether the market will pay significant attention to FAA letter to Boeing as dealing with various issues is a natural part of any certification process.

What’s Next For Boeing Stock?

Boeing stock is up by about 13% year-to-date as investors continue to bet on the recovery of the airline industry. In addition, Boeing gets revenue from its defense and services segments, which brings more stability to the company’s financial performance despite the current challenges in the commercial airplanes segment.

Analysts expect that Boeing will report a loss of $1.51 per share in 2021. In 2022, the company is projected to report a profit of $5.37 per share so the stock is trading at roughly 45 forward P/E.

Analyst estimates have slightly improved in recent weeks, but the company’s valuation looks rather high even for the current market environment, although it is clear that the market is ready to look beyond 2022.

It should be noted that high valuation levels make the stock more sensitive to any negative news, so it’s not surprising to see that Boeing stock is down by about 3% after the release of reports about 777X certification.

However, it remains to be seen whether Boeing shares will be able to gain any downside momentum as the stock market remains bullish and investors look ready to buy big cap stocks at high levels.

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