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The commercial aerospace giantBoeing is starting to look like Tesla, the electric-vehicle pioneer, in one respect: There is increasing disagreement among analysts about what the stock is worth. Monday morning, Seaport Global launched coverage of Boeing (ticker: BA) stock with the equivalent of a Buy rating. Analyst Rich Safran has a target of $277 for the stock price, the highest on Wall Street. Another bull, Goldman Sachs analyst Noah Poponak, raised his price target on Boeing stock from $209 to $238 a share on Sunday evening.
Not everyone—not even half of the analysts on Wall Street—is upbeat.
Fewer than 40% of analysts covering Boeing stock rate the shares the equivalent of Buy. The average Buy-rating ratio for stocks in the Dow Jones Industrial Average is roughly 55%. Less than 30% of analysts covering Tesla, an always controversial stock, rate it at Buy. Price targets on Boeing shares range from roughly $120 to $280. The $160 spread is about 80% of the recent stock price. The average bull-bear spread for stocks in the Dow is less than 50%. Price targets on Tesla issued by large brokers range from about $300 to $1,100. The $800 spread is about 90% of the $885 stock price.
Analyst opinion is split on both stocks. That’s par for the course for Tesla, but it’s unusual for Boeing. The aerospace stock was a Wall Street darling in early 2019,when about 80% of analysts rated the shares at Buy. That, of course, was before both the pandemic and the grounding of the 737 MAX jet.
The MAX—Boeing’s newest model single-aisle jet—has been barred from carrying passengers world-wide since March 2019, following two deadly crashes inside of five months. Boeing has been working on fixes and hopes to begin delivering the plane to airline customers by the end of the summer.
The trouble with the jet wiped out roughly $40 billion in market value at Boeing, while the blow from Covid-19 was twice that size, depending on the time frame studied. Optimism about a global rebound in travel has helped lift the stocks in recent days. Safran thinks the worst is priced in for Boeing stock. His target for the stock price, at $277, is roughly 15 times the approximately $18 a share he sees as the company’s normal free cash flow. The Dow, for comparison, trades for about 17 times free cash flow. Boeing, of course, isn’t generating free cash flow right now.
Poponak, like Safran, believes expectations for commercial aircraft production have gotten too bearish. He rates both Boeing and Airbus (AIR.France) shares at Buy. His target for Airbus is €84 (about $93) a share, in line with the price on Monday morning.
Boeing stock added 41% this past week. In fact, all travel stocks crushed the S&P 500’s return of 4.9%. Airline stocks rose 44% on average last week. American Airlines (AAL) stock, for one, rose 77%. Cruise shares jumped 37%. Casino operators’ shares gained about 14%. The travel rally, looking up and down the value chain, created about $137 billion in market value over the past five days.
The upturn got more fuel Monday as Bank of America upgraded shares of both JetBlue Airways (JBLU) and Alaska Air (ALK). Airline stocks rose about 5%, on average, early on Monday. Boeing shares—responding to Poponak’s bullish recommendation, Goldman Sachs’s increase in its target price, and the BofA airline upgrade news—rose about $20, or 10%.
Is it too late to join in? That’s an individual decision. Boeing shares are up about 150% from their 52-week low, including Monday’s gains. But they are still far below their 52-week high of $391.