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Boeing stock has limited upside potential, analysts say

Boeing stock has limited upside potential

Boeing (NYSE: BA) stock price has been under pressure as reports indicate airplane production and deliveries will decline sharply in the coming years, which would negatively impact plane makers. Passenger airline carriers have also slashed their expansion plans due to slow air travel demand and liquidity related issues.

Boeing stock price is currently trading around $170, down almost by half in the past twelve months. The market analysts are seeing limited upside potential for Boeing stock due to slowing commercial segment orders and deliveries.

Aviation Week forecast shows that commercial aircraft deliveries over the next 10 years will stand below 16K jets. This represents a decline of 30% from the previous forecast. The forecast also shows that widebody aircraft deliveries will stand in the range of 2,500, down sharply from an earlier forecast of 4,300.

Boeing has recently reported that it has lost another 43 orders for its 737 MAX planes in July. The total number of cancellations reached 398 this year. The company has only delivered four aircraft to customers in July. Boeing also said it didn’t win any new orders in July. However, the company has recently started the Super Hornet fighter jet tests for the Indian Navy $6.6bn contract.

BA The Boeing Company daily Stock Chart
Boeing stock price performance. Finviz chart

The high debt is among the biggest problems for Boeing. The rating agency S&P has declined Boeing’s debt outlook from stable to negative due to slow air travel demand.

“The outlook for global air travel and aircraft demand “continues to weaken, which will likely result in lower Boeing earnings and cash flow than we previously expected the next few years, delaying an improvement in credit ratios,” S&P says.

Vertical Research analyst Rob Stallard has provided a price target of $150 for Boeing stock. The analyst sees a difficult time ahead for the planemaker.

Boeings Commercial Airplanes revenue plunged 78% year over year in the second quarter while Global Services revenue dropped 23%. The company expects further revenue decline for its commercial airplanes segments in the third quarter.  

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Siraj is a finance writer based in Saudi Arabia with a strong understanding of and passion for the stock market, cryptocurrency, economics, and finance. He has worked for international clients for many years on several projects related to the stock market, equity research, accounting, and finance. Siraj is a published financial analyst on some of the largest finance websites.