Should I buy Boeing shares after Wells Fargo increased its price target?

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 Nov 25, 2021
  • Wells Fargo increased its price target on Boeing
  • Seaport Global reiterated its buy rating on Boeing
  • Coronavirus continues to pose downside risks

The Boeing Company (NYSE: BA) shares have weakened from $278 to $204 since March 15, 2021, and the current price stands at $210.

Wells Fargo has a positive view of Boeing

Boeing reported weaker than expected third-quarter results in October; while, Dave Calhoun, CEO of Boeing, expects that airlines around the world would be ready to ramp up international travel by the second half of 2022.

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Total revenue has increased by 8.4% Y/Y in the third quarter to $15.28 billion, which was less than expected, while the GAAP EPS was -$0.19 (missed by $0.71). Commercial Airplanes revenue increased to $4.5 billion, primarily driven by higher 737 deliveries.

Global Services revenue increased to $4.2 billion in the third quarter; still, Defense, Space & Security revenue has decreased to $6.6 billion from $6.8 billion in the third quarter of 2020.

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 2023.

Coronavirus pandemic continues to pose downside risks together with supply chains crisis, and if the situation gets worse, the demand for new planes could be hit again.

During its third-quarter earnings report, the company’s management announced that Boeing is prepared for unexpected conditions. Boeing President and Chief Executive Officer David Calhoun added:

We are driving stability across our operations, investing in our future, and positioning our teams to deliver for our customers as the market recovers. Going forward, supply chain capacity and global trade will be key drivers of our industry and the broader economy’s recovery.

Wells Fargo upgraded Boeing shares last week and increased its price target from $224 to $272. According to Matthew Akers, an analyst from Wells Fargo, the risk-reward ratio remains positive, and Boeing will likely benefit from 737 MAX recertification in China and easing international travel restrictions.

Matthew Akers also said that Boeing is less susceptible to supply chain disruption given its large inventory of completed aircraft, which is very important in the current situation.

Research company Seaport Global also has a positive view of Boeing and reiterated its buy rating with a $298 price target.

$200 represents current support

Boeing’s stock price has fallen more than 20% after reaching the highest level in 2021 of $278 on March 15, and for now, bears remain in control of the price action.

Data source: tradingview.com

If the price jumps above $240 resistance in the upcoming weeks, it will signal trading shares, and the next target could be at $250 or even above.

Summary

Boeing reported weaker than expected third-quarter results in October, but the company’s management announced that Boeing is prepared for unexpected conditions. Last week, Wells Fargo upgraded Boeing shares and increased its price target from $224 to $272, while Seaport Global reiterated its buy rating with a $298 price target.

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