Boeing stock rallied Monday after the Dow Jones aircraft manufacturer received an upgrade to a buy rating due to accelerating jet deliveries.
Deutsche Bank lifted its rating on Boeing stock to buy from neutral early Monday and hoisted its price target on the shares to $270 from $204, which represents about a 25% upside to current levels.
Boeing (BA) aircraft deliveries are accelerating and Deutsche Bank believes the Dow Jones giant can sustain the improved performance. The momentum from the improved deliveries should translate to positive free cash flow revisions, which will drive the shares to outperform, the firm wrote in a research note.
Boeing delivered 480 airplanes in 2022. That is expected to increase to about 523 jets this year, according to FactSet forecasts. Analysts see jet deliveries improving to about 700 aircraft in 2024, climbing to 778 by 2025.
Boeing dominated orders at the Dubai Airshow last week, which ended Nov. 17. The biennial, five-day showcase featured the latest innovations and developments for the aerospace industry and included more than 1,400 exhibitors with over 180 aircraft flying and on display.
Emirates airline last Monday announced a $52 billion order for 95 Boeing widebody jets. Flydubai announced an $11 billion order for 30 787-9 Dreamliners during the first day of the show.
Elsewhere, SunExpress Airlines placed a firm order for 45 Boeing 737 MAX jets with an additional purchase option for another 45 planes. Boeing also landed a deal with Ethiopian Airlines Tuesday for 11 Dreamliner jets and 20 737 MAX planes, with an option to buy 36 additional planes.
Both Boeing and rival Airbus (EADSY) have been hammered by complications throughout the year, particularly regarding supplier Spirit AeroSystems (SPR). Spirit workers went on strike earlier this year before reaching a new compensation deal in June. Meanwhile, quality defects with Spirit’s fuselage systems have curbed Boeing’s 737 production, which already suffered from supply chain issues during the pandemic. Some of the issues included misdrilled holes in the aft fuselage bulkhead of the 737, Boeing’s bestselling jet.
Boeing lowered its 737 delivery target on Oct. 25 to range from 375 to 400 jets this year, from its previous guidance of 400 to 450 aircraft. The Dow Jones giant delivered a total 405 airplanes this year through Oct. 31, according to the company website.
Boeing stock rallied 4.7% Monday, capping a four-week run-up that punched upward through the stock’s 200-day moving average. Shares are climbing toward a 243.10 buy point.
BA stock has jumped about 14.5% so far this year after easing from early August highs.
Airbus, which trades in American depositary receipts (ADRs) under the ticker EADSY, climbed about 1.1% Monday. Shares are less than 1% below a 36.73 entry for a double-bottom base. EADSY stock spiked nearly 23% in 2023.
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