Bernstein raises Boeing stock rating, price target to $218

On Monday, Bernstein analysts led by Douglas Harned upgraded Boeing stock from Market Perform to Outperform, setting a new price target of $218, up from the previous target of $181. The upgrade reflects Boeing’s recent progress and improved growth prospects following heightened Federal Aviation Administration (FAA) scrutiny. According to InvestingPro data, Boeing shares have shown strong momentum with an 11.7% gain over the past week, though current analyst targets range from $140 to $230, reflecting mixed market sentiment. The stock currently trades at $177.95, and InvestingPro analysis suggests the stock is currently overvalued.

Boeing has been under close observation since the Alaska door plug incident in January 2024. However, Harned noted that Boeing is now on a more stable trajectory than it was in 2023. The production of the 737MAX is expected to reach 38 per month by July, aligning with Boeing management’s statements during the first-quarter earnings call. With a market capitalization of $134.2 billion and a beta of 1.24, Boeing remains a significant player in the aerospace sector, though InvestingPro data indicates weak financial health metrics.

Additionally, Boeing’s new production guidance for the 787 model has exceeded expectations. The company anticipates increasing production to 7 units per month before the end of the year, having resolved quality issues and heat exchanger supply constraints. Boeing CEO Ortberg also mentioned that the 737 production rate could step up to 42 per month by the end of the year, dependent on FAA collaboration, although Bernstein assumes this may occur in January. Analysts expect Boeing’s revenue to grow by 26% this year, as revealed in InvestingPro’s comprehensive analysis, which includes over 30 key financial metrics and exclusive ProTips available to subscribers.

Harned’s outlook includes a conservative approach to Boeing’s production rate increases for the 737, suggesting subsequent rate hikes to 47, 52, and 57 per month could occur in nine-month intervals, in contrast to Boeing’s target of six-month intervals. This caution is due to Boeing’s lack of history with such rapid production increases.

The analyst’s positive outlook is set against a market where Boeing and its main competitor form a duopoly, with demand expected to surpass supply throughout the decade. This industry dynamic, along with Boeing’s recent advancements, has led to the improved rating and price target for the aerospace giant’s shares.

In other recent news, Boeing Co (NYSE:BA) has been actively engaged in several developments that could impact its future. Boeing shareholders recently voted on key governance issues, including the approval of executive pay and the election of board members, as reported in an 8-K filing with the SEC. Additionally, UBS analyst Gavin Parsons (NYSE:PSN) has raised Boeing’s stock price target to $207 from $190, maintaining a "Buy" rating, citing the company’s positive progress and strong global demand for its aircraft. Meanwhile, Boeing is in negotiations with Air India to sell approximately 10 Boeing 737 MAX jets, which were initially rejected by Chinese clients amid ongoing trade tensions.

In a separate development, U.S. President Donald Trump has suggested that Boeing should default on China for halting the acceptance of aircraft deliveries, a move that CEO Kelly Ortberg confirmed is due to the current tariff environment. Furthermore, the U.S. is preparing a $100 billion arms deal with Saudi Arabia, potentially involving Boeing alongside other major defense contractors like Lockheed Martin (NYSE:LMT) and Northrop Grumman (NYSE:NOC). This arms package is expected to include advanced weapons systems, though the involved companies have not commented on the matter. These recent developments highlight Boeing’s strategic maneuvers in response to global market dynamics and geopolitical challenges.

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