Susquehanna has reaffirmed its optimistic stance on Boeing (NYSE: NYSE:BA), maintaining a Positive rating and a $230.00 price target for the aerospace giant.
The endorsement comes after Boeing disclosed its August deliveries and orders, which showed a modest decline in aircraft deliveries compared to July, but continued strength in its backlog.
Boeing reported a total of 40 aircraft deliveries in August, a slight decrease from the 43 delivered in July. The company's 737 model saw 32 deliveries in August, contributing to a quarter-to-date (QTD) total of 64.
The delivery pace aligns with Susquehanna's third-quarter estimate of 100 deliveries for the 737. Additionally, the 787 model added four deliveries in August, reaching a QTD total of 10.
While gross orders for Boeing decreased from 72 in July to 22 in August, the company's backlog remains solid. The orders received in August were exclusively for the 737 model, with the largest being an order for 20 MAX jets.
The analyst pointed out that several orders were announced around the Farnborough International Airshow in late July, which may have contributed to the higher numbers seen that month.
Despite the sequential dip in monthly orders, Boeing's substantial backlog, which includes 6,165 unfilled orders as of the end of August, demonstrates a strong and ongoing demand for its aircraft. This backlog is a key indicator of the company's long-term revenue potential and its position in the aerospace market.
In other recent news, Boeing has been engaged in several significant developments. The company successfully negotiated a new contract with The International Association of Machinists and Aerospace Workers, offering a 25% general wage increase and promising to manufacture their next commercial airplane in the Seattle area. However, some union members expressed dissatisfaction, seeking a 40% wage increase and a return to the defined-benefit pension plan.
Boeing has also adjusted its production goal for the 737 MAX aircraft to March 2025 due to challenges in ramping up production. This decision comes amidst additional safety and regulatory scrutiny from the Federal Aviation Administration, which has stressed the importance of Boeing meeting adequate safety processes before lifting the production cap on the 737 MAX aircraft.
In the face of competition, BofA Securities maintained a Neutral rating on Boeing, despite Airbus announcing plans to initiate a new aircraft program expected to reduce fuel consumption by 25% compared to the A320.
On the technological front, Boeing announced plans for a 2026 launch of a satellite named Q4S, aimed at testing quantum entanglement swapping technology in space. This initiative marks a significant step towards the development of a secure quantum internet.
InvestingPro Insights
In light of Susquehanna's reaffirmed positive outlook on Boeing, InvestingPro data and tips provide additional context for investors considering Boeing's stock. As of the last twelve months leading up to Q2 2024, Boeing's market capitalization stands at approximately $98.63 billion, despite facing challenges such as weak gross profit margins of 10.46% and an operating income margin in the negative at -0.69%. These financial health indicators are crucial, especially as Boeing is not expected to be profitable this year, with a negative P/E ratio of -34.76 signaling earnings difficulties.
From a trading perspective, Boeing's stock price is currently near its 52-week low, which might be seen as a potential entry point for investors, as reflected by the stock trading at 59.83% of its 52-week high. However, InvestingPro Tips suggest caution due to the company's high EBITDA valuation multiple and the fact that Boeing does not pay a dividend, which might be a consideration for income-focused investors. Additionally, the company's prominent position in the Aerospace & Defense industry is a factor to consider when evaluating its long-term strategic standing.
For those looking to delve deeper, InvestingPro offers a number of additional tips on Boeing, providing a comprehensive analysis that can guide investment decisions. The platform's fair value estimate stands at $156.42, which is below the current analyst target but offers an alternative perspective on the company's valuation.
These insights and more are available on InvestingPro, which includes a total of 9 detailed InvestingPro Tips for Boeing, offering a nuanced picture of the company's financial health and market position.
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