It has been a difficult few years for Boeing (BA 4.54%), but one Wall Street analyst is out with a prediction that better times are at hand. Investors are taking note, sending shares of Boeing up 4.5% as of 2 p.m. ET Monday.
Deliveries are on the rise
Boeing’s shareholders have been on a journey they’d likely rather forget. The stock has lost half of its value since early 2019 on a combination of engineering issues and a pandemic-related sales decline.
But the worst appears to be over. Airlines are flying again post-pandemic and have resumed ordering new planes. The 737 MAX was grounded for 18 months following a pair of fatal crashes but is airborne again over most of the globe, and other new airframes, including the 777X, are winning new orders.
Deutsche Bank analyst Scott Deuschle sees clear skies up ahead. The analyst upgraded the stock to a buy from a hold and raised the bank’s price target to $270, from $204, implying 30% upside from here.
Deuschle sees Boeing on pace to deliver 520 planes this year and more than 800 in 2025. Boeing hasn’t hit the 800-delivery milestone since 2018.
Is Boeing a buy ahead of a delivery surge?
Boeing certainly appears headed in the right direction, but investors should not ignore how far the aerospace giant still has to go to get back to normal. Those increased deliveries will generate all-important cash, but for now, a significant portion of that cash will go toward paying down a debt pile that ballooned by more than 300% during the pandemic.
There is also still a lot that could go wrong. Boeing is wrestling with supply chain issues, and any economic deceleration up ahead could cause some airlines to defer orders. Deuschle wouldn’t be the first analyst to signal the “all clear” on Boeing in recent years, only to see something else go wrong.
Absent another massive shock on the scale of the pandemic or the 737 MAX grounding, Boeing stock is likely heading up from here. But if recent history is a guide, that journey might take a lot longer than some investors hope it will. Those thinking of buying in should be prepared to buckle up and prepare for a long ride.
Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.