Boeing stock price forecast: I’m buying the Flight 1282 dip

Boeing (NYSE: BA) stock price, which I praised a few weeks ago is now in trouble after its woes during the weekend. The shares plunged by almost 8% in the pre-market, making it the worst-performing Dow Jones constituent. Worse, Spirit AeroSystem's (SPR) stock price was off by over 17%.

What next for Boeing shares

In my last article on Boeing, I praised the company for its recent performance as demand for its planes rose. I argued that the company had received substantial orders in 2023 and that it had managed to solve some of its most pressing issues. 

The good news ended during the weekend after an Alaska Airlines plane went through serious decompression at 16,325 feet. Flight 1282 was a relatively new plane that was delivered to Alaska Airlines in October.

In the aftermath. Alaska Airlines grounded all its 737 Max 9 planes. The Federal Aviation Administration (FAA) followed suit and ordered several planes by other airlines to be grounded for inspection.

This crisis send memories of what happened a few years ago when an Ethiopian Airline jet crashed enroute to Nairobi. This crash happened a few months after a similar plane owned by Lion Air crashed as well.

I believe that this crisis is different from the one that caused Ethiopian and Lion Air to crash. For one, I suspect that this situation will not lead to an extended grounding of Boeing 737 MAX 9 jet. Instead, the grounding will be relatively narrow in nature.

Besides, a decompression challenge is fairly easy to solve unless there is a major issue in the plane. In 1972, American Airlines flight 96 had a similar issue and the plane landed well in Detroit. It then happened in Turkish Airlines in 1974, leading to the death of 335 passengers and 11 crew members. Since then, decompression issues are rare. 

Therefore, I believe that the impact of this crisis on Boeing’s order intake, revenues, and profitability will be negligible. In the long term, this will be one of the several events that Boeing has to deal with. In the past, the company, together with Airbus, have been forced to deal with similar groundings. This view was shared with a SeekingAlpha analyst who noted that:

“As a result, I believe that the scope will solely be on the Boeing 737 MAX 9 (with deactivated doors) of which Boeing has around 300 in backlog by November 2023 and over 200 airplanes delivered.”

Boeing stock price forecast

BA chart by TradingView

The daily chart shows that the BA share price peaked at $267.27 in December last year. It then pulled back in sync with the recent price action of American equities. This sell-off accelerated after the Alaska Airline issue and landed to $231. Still, the shares remains above the 100-day moving average while the RSI and the MACD have retreated.

Therefore, I suspect that the stock will have short-term volatility and then bounce back as Boeing handles the issue. If this happens, the shares will likely bounce back and retest the December high at $267.27. Most of the challenges, however, will be on Spirit AeroSystems, which has had a few issues in the past few years.