Boeing shares are up more than 24% YTD. Should I invest?

By: Stanko Iliev
Stanko Iliev
Stanko dedicates himself to providing investors with relevant information they can use to make investment decisions. He loves the… read more.
on Mar 16, 2021
  • Boeing shares have advanced more than 24% since the beginning of January 2021
  • Boeing won the order for 24 MAX jets
  • Canaccord raised its price target to $275 on Boeing

Boeing shares (NYSE: BA) have advanced more than 24% since the beginning of January 2021, and the current share price stands around $255. Boeing’s business will be affected by the pandemic certainly all this year, and the Covid- 19 concerns remain the main problem for this company.

Fundamental analysis: Boeing won the order for 24 MAX jets

Boeing shares have found strong support above $200, but the Covid-19 pandemic continues to impact its business. Despite this, Canaccord raised its price target to $275 on Boeing after the Q4 earnings report as it sees further upside potential.

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“While we continue to see risk to the Boeing 737 MAX production schedule, we believe the combination of a recovery in passenger traffic, higher fuel prices, and improved airline financial health will support Boeing’s MAX delivery plans,” said Canaccord analyst Ken Herbert.

According to the latest news, Boeing won the order for 24 MAX jets from a private investment firm 777 Partners. Another positive news is that sales in February outnumbered cancellations for the first time in 14 months.

Boeing sold 82 aircraft last month while it had 51 cancellations which could be an indication of the potential start of a recovery. Last week, the company also reported that it is near an agreement to sell dozens of 737 MAX 7 jets to Southwest Airlines.

This stock is still risky; in my opinion, the company’s business remains under pressure, and maybe it is not the right moment for investing in Boeing shares. The company has decreased its revenue in 2020 to $58.15B from $76.55B, while a net loss was 11.87B in 2020.

Boeing has increased debt by $50B to ensure it has the liquidity to survive, and it is still looking to arrange a new $4B revolving credit facility from Citigroup. Nobody still doesn’t know when normal demand will return, while Boeing’s management indicated that production rates wouldn’t return to 2011 levels until early 2022.

Technical analysis: The risk/reward ratio is not good enough for “value” investors

Technically looking, Boeing shares could advance above the current price levels this March, but the risk/reward ratio is not good enough for “value” investors. Boeing’s size will always attract potential investors; still, the stock’s current price does not reflect the company’s fundamental background.

Data source: tradingview.com

If the price jumps above $280, it would be a signal to trade shares, and the next target could be around $300, but if the price falls below the $200 support level, it would be a firm “sell” signal.

Summary

Boeing’s business will be affected by the pandemic certainly all this year, but despite this, Canaccord raised its price target to $275. Boeing shares have been moving in an uptrend last several weeks, and for now, the positive trend remains intact. If the price jumps above $280, the next target could be around $300, but if the price falls below the $200 support level, it would be a sign of trend reversal.

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