The share price of aerospace giant Boeing (NYSE: BA) is showing strength after receiving an upgrade from one Wall Street analyst amid the turbulence faced by the company.
Despite operational setbacks, financial strain, regulatory scrutiny, and labor disputes as of press time, the Boeing stock was valued at $169.90, rising by 2.3% in the pre-market to trade at $173.80 ahead of market opening on January 6.
The BA share price has dropped over 25% in the last year, with losses extending into 2025, where the equity is down almost 5% year-to-date.
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BA stock receives an upgrade
In spite of these challenges, Barclays analyst David Strauss, in an investor note on January 6, upgraded the stock from ‘Equal Weight’ to ‘Overweight’ and raised its price target from $190 to $210.
In his review, Strauss noted that while the upside for Boeing may not be immediately compelling based on traditional valuation metrics, he sees potential in the company’s ability to demonstrate sustained positive momentum in production and deliveries.
The analyst suggested that Boeing is poised to deliver a strong performance in 2025, which could significantly boost the stock price.
At the same time, the expert stated that Boeing’s ability to manage free cash flow improvement and its potential to deleverage without issuing new equity have been ongoing concerns.
However, Barclays now sees a viable path to a more normalized capital structure over the next couple of years, even if the company continues to burn cash in 2025 and needs liquidity to close its acquisition of Spirit AeroSystems (SPR).
One of the most significant factors influencing the positive outlook is Boeing’s new CEO, Ortberg. According to Strauss, his outsider’s perspective is seen as a vital catalyst for cultural change within the company. He also highlighted how the ongoing labor force actions could benefit the Virginia-headquartered firm.
“New CEO Ortberg importantly brings an outsider’s perspective that we believe is critical to affect meaningful cultural change and to rebuild credibility with internal and external stakeholders (FAA/airlines). We think the IAM strike is likely to turn out to be a blessing in disguise, allowing time for necessary improvement to the MAX production system and workforce training that wouldn’t have been possible without an extended work stoppage,” he said.
Wolfe Research analyst Myles Walton recently shared a similar bullish outlook. Walton pointed out that the recent Jeju Airlines crash will likely have minimal impact on Boeing’s performance, as the incident had little to do with the company. To this end, he maintained a ‘Buy’ rating and a $195 price target for BA.
What next for Boeing stock
Indeed, the upgrade could be welcomed news for Boeing investors, considering the company had a tumultuous 2024. Boeing’s year began with a 737 MAX 9 door plug failure, sparking safety concerns and regulatory scrutiny.
The FAA capped 737 MAX production, hampering delivery targets. A six-week machinist strike worsened cash flow issues, while leadership changes added uncertainty.
The Starliner spacecraft also faced technical problems, further hurting Boeing’s reputation in the defense sector. These setbacks led to Boeing being the Dow Jones’ biggest loser for the year. Still, in December, several developments emerged that will likely turn around investor optimism in the company.
In particular, Boeing resumed 737 MAX production in December after a strike over a new labor contract. The company also secured a 100-plane order from Pegasus Airlines, with an option for another 100.
This boosts Boeing’s backlog and potentially reassures investors that airlines still trust the 737 MAX despite production delays, easing concerns about cancellations.
Looking ahead, Boeing is likely to see a recovery, considering its long-term outlook remains strong, stemming from factors such as the Wall Street confidence and a union agreement focusing on quality control and improved employee pay and benefits.
Featured image via Shutterstock
