On Monday, Wolfe Research reaffirmed its Outperform rating and $195.00 price target for Boeing (NYSE:BA), following recent aviation incidents involving the aircraft manufacturer's models.
According to InvestingPro data, Boeing's stock has shown resilience despite recent challenges, with analysts maintaining a consensus Buy recommendation.
The firm's analyst, Myles Walton, emphasized that the recent crash of Jeju Air flight 2216, involving a 15-year-old Boeing 737-800, should not affect the company's stock or its ongoing efforts to increase production of the 737MAX model.
Walton clarified that the root cause of the accident is likely unrelated to the aircraft's workmanship or design from 15 years ago. He pointed out that while the aerospace industry does face risks from rare but severe accidents, they should not be construed as direct reflections on the aircraft manufacturers.
The analyst also mentioned a separate incident over the weekend, where a 24-year-old Boeing 737-800 experienced a runway excursion due to a hydraulic failure, which limited the pilot's control during landing. Similar to the Jeju Air incident, Walton stated that this event should not negatively impact Boeing's stock.
Furthermore, Walton referred to the Christmas Day incident where an Azerbaijan Embraer E190 was allegedly shot down, noting it as a tragic accident that should be viewed as unrelated to either the manufacturer or its operator. He highlighted the overall safety record of commercial aviation, mentioning that until December 25, there had only been one fatality on a commercial scheduled western-built jet in 2024, caused by air turbulence.
Wolfe Research's stance suggests confidence in Boeing's stock performance and outlook, despite the recent accidents involving its aircraft. The firm's price target of $195.00 remains unchanged, indicating a belief in the company's value and potential for investors. InvestingPro analysis indicates that Boeing is currently undervalued based on its proprietary Fair Value model.
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In other recent news, American Airlines (NASDAQ:AAL) has made significant adjustments to its credit agreements and faced a temporary grounding of its flights due to a technical glitch. The airline has recently entered into amended credit agreements, replacing existing term loans worth nearly $2 billion with new ones, as part of its ongoing debt management efforts. This development was followed by an unexpected halt to all of American Airlines' flights within the United States due to an unexplained technical issue, with resolution efforts underway.
Citi has increased its stock price target for American Airlines, pointing to strong cash flows from co-branded credit card partnerships as a catalyst. The airline has also entered into a 10-year co-branded credit card deal with Citi, expected to enhance annual cash compensation by 10%. Other investment firms, including TD Cowen and UBS, have also reacted positively to these developments.
The global airline industry, including American Airlines, is poised to see financial improvements due to a 20% drop in Brent crude oil prices. This is expected to lead to lower fuel costs, which make up 30% of total expenses for airlines. However, caution has been advised due to potential costs linked to a new distribution strategy and the company's high net leverage.
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