Boeing (BA) could wrap up 2022 with two landmark aircraft orders instead of one. BA stock rose in buy range Monday as yet another analyst raised his price target on the Dow giant’s shares.
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Boeing-Air India Deal
Sources told Reuters Sunday that Air India is close to ordering 500 jetliners worth tens of billions of dollars from both Boeing and Airbus (EADSY). Air India is undergoing a financial restructuring after diversified Indian heavyweight Tata Group, also the parent Tata Motors (TTM), regained control of the airline in January.
The historic order could be worth $100 billion at list prices and worth tens of billions of dollars even after discounts. It could include 400 narrow-body jets and 100 wide-bodies, including Airbus A350s and Boeing 787s and 777s, the report said. That would rank the order “among the biggest by a single airline in volume terms, overshadowing a combined order for 460 Airbus and Boeing jets from American Airlines over a decade ago,” Reuters reported.
The timeline for an official announcement is unclear. But Reuters said sources sought anonymity because “finishing touches are (being) placed on the mammoth deal in coming days.”
India is the world’s fastest-growing air travel market, according to Reuters.
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Boeing-United Airlines Deal
On Tuesday, Boeing is preparing for another historic order. As IBD reported Dec. 9, Boeing and United Airlines (UAL) could jointly announce an order for dozens of Boeing 787 Dreamliner jets.
United Airlines is looking to order around 100 planes to replace its aging and struggling widebody jets, including its Boeing 767 fleet. Reports suggest UAL could buy dozens of Boeing 787 Dreamliner jets.
Plane makers and their airline customers are seeing commercial aircraft demand recover after a years-long hit due to Covid-19 travel restrictions. Boeing is undergoing a restructuring of its own, after a series of both industrywide and company-specific challenges.
BA Stock
Shares of Boeing popped 2.6% to 184.25 on the stock market today. The move put BA stock briefly beyond the 5% chase zone from a 173.95 buy point for a cup base.
BA stock is still in buy range above an alternative entry near 180, from its recent mini-consolidation.
The Dow Jones stock has made choppy progress from its Nov. 10 breakout past the cup-shaped entry. The relative strength line for Boeing stock is at its best levels since February, a sign of outperformance vs. the S&P 500 index.
On Monday, JPMorgan analysts hiked their price target by $30 to $200 per Boeing share, which they rate at overweight.
“Our underlying FCF (free cash flow) estimate of $8 billion is below the target of $10 billion that management established for 2025-26, but we will refine our outlook as the production and delivery ramp take shape,” JPMorgan analyst Seth Seifman wrote. “And there is both delivery and margin upside if Boeing can get closer to its targets.”
On Wednesday, Bank of America’s Ron Epstein raised his price target on BA stock to 190 from 165. Also recently Citibank analyst Jason Gursky initiated coverage with a buy rating, while Wells Fargo analyst Matthew Akers raised his price target to 218 from 185.
UAL stock rose 1.5% Monday. EADSY shares climbed 1%. TTM shares fell 0.6%, below the 50-day moving average.
Boeing Eyes Turnaround
At an investor day on Nov. 9, Boeing gave a free cash outlook well above Wall Street’s estimates on expectations for rising jet deliveries.
That came after Boeing on Oct. 26 delivered a surprise loss for the third quarter and cut its Max delivery target. But the Dow Jones giant affirmed a path to positive free cash flow in 2022 at that time.
During the pandemic, Boeing suffered from the collapse in commercial and business air travel, compounded by the grounding of the global 737 MAX fleet following two fatal crashes in 2018 and 2019. The company also faced setbacks to key defense programs.
Recession fears and supply disruptions are now rippling through industrial manufacturing chains.
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