Brokerage firm Bernstein kept their bullish call on Boeing Company.
Bernstein analyst also increased the price target on the stock, citing the return on the defense business and recent order wins.
Why Bernstein is big on Boeing
Douglas Harned, Bernstein analyst, maintained an outperform rating on the stock while increasing the price target to $249 from $218.
Harned sees strong growth for Boeing due to its defense business returning, which would generate cash for the company.
He also pointed out that the recent deal with Qatar Airways and the restarting of delivery to China are positives for the company.
The analyst sees more upward potential for the stock.
“None of this is without risk, given Boeing’s many missteps over the last decade. But, as positive elements appear to line up, we believe there is more risk in not owning a stock with a history of momentum”. Harned said.
However, the analyst sees risks for the company in the low number of deliveries of 737 jets in May.
He is also concerned about the timing of certification 737 Max 7 and Max 10 aircraft.
Boeing’s recent wins
Last week, Boeing announced a $96 billion deal with Qatar Airways to supply 210 aircraft. Boeing will mainly deliver the 787 Dreamliner.
Before this, the company won a $13 billion deal with British Airways’ parent, International Airlines Group.
Another positive development for the company was China resuming deliveries of the company’s aircraft.
China had banned its airlines from taking aircraft deliveries from Boeing in retaliation for US President Donald Trump’s 145% tariffs on China.
The US and China had rolled back most of the tariffs. The reversal of tariffs has helped Boeing as it prompted the Chinese ban reversal.
Concerns still linger
All said, Boeing is still not out of the woods completely.
The US regulators have not granted certification to Boeing’s 737 Max 7 and Max 10 aircraft.
There is increased scrutiny over the certification process after two fatal crashes of Boeing’s 737 Max 8.
One involving a Lion Air flight in October 2018 and an Ethiopian Airlines flight in March 2019.
After the crashes, the regulators have increased scrutiny on Boeing’s new aircraft.
The company has struggled to meet stricter regulatory requirements, especially for flight control software and systems integration.
The 737 Max 7 and Max 10 variants have been facing years of delay. This has frustrated the airline’s customers who have placed orders.
Airbus, the company’s competitor, has gained market share from Boeing after these delays.
Boeing is fighting for a turnaround
Boeing has managed to stem the flow, as seen in its Q1 earnings. The company’s losses narrowed from the previous year.
Its revenue has increased as aircraft deliveries have improved.
Boeing also has order backlogs worth $500 billion.
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