Boeing stock price forecast: turnaround to take time

Boeing (BA) stock price has continued to lag the broader market this year as the company has moved from one issue to the other. It has crashed by over 30% in 2024 and by 34% from the year-to-date high. 

Boeing loses it to SpaceX

The latest Boeing loss is in its defense, space, and security segment, which generated over $6 billion in revenues in the last quarter. 

In a statement on Saturday, NASA announced that it had selected SpaceX to bring two astronauts from space amid concerns about Boeing’s Starliner safety. Boeing has always insisted that its Starliner vehicle was safe to bring them home. 

Therefore, by selecting Elon Musk’s SpaceX, means that NASA believes that the company is safer than Boeing. It also raises concerns about whether NASA will award such contracts in the future. 

Most importantly, the news has hurt Boeing’s reputation in the government and among other potential customers. 

However, from a financial standpoint, the company will not make a big loss since the space segment has, historically, been a big cash generator for the company. 

Boeing has lost market share

The main reason for the Boeing stock weakness is that the company has become highly embattled in the past few years. 

Its crises move back in 2018 when a Boeing 737 MAX crashed in Indonesia followed by a similar crash involving an Ethiopian Airlines. 

The company solved the issue but at big cost. It reported a $636 million loss in 2019 as its revenue dropped to $76.6 billion from $101 billion a year earlier. 

Its biggest annual loss came in 2020 when it made a whopping $11 billion because of the pandemic and its Boeing 737 MAX groundings. 

The company has now been working hard to lower its losses. Its annual loss in 2023 improved to $2.2 billion from $5 billion a year earlier. It also paid $2.5 billion in a settlement in 2021 and another $200 million with securities regulators in 2022.

Boeing returned to a crisis earlier this year when some of its planes developed problems, leading to another grounding by the FAA. It was also investigated by the Federal Aviation Authority and the DoJ. 

Most importantly, Boeing has lost its market share to Airbus in the civil aviation industry. In its most recent results, the company said that its total backlog stood at over $516 billion, including 5,400 commercial planes.

Airbus, on the other hand, has a backlog of 8,585 planes and there is little chance that Boeing will reclaim its market share. Some of its long-standing clients have even considered making Airbus orders.

The most recent crisis was that Boeing halted its 777x tests after discovering structural damage.

Turnaround strategy

Boeing is working on an expensive strategy to turn around its business, with the low-hanging fruit being replacing the CEO. Dave Calhoun, who has earned millions in the company, will be replaced by Kelly Ortberg, who previously headed Collins Aerospace. 

The company has also announced a plan to acquire Spirit AeroSystems, a deal that will close in 2025. It hopes that bringing the company, which it spun off in 2005, will help it to improve quality of its services. 

Boeing has also committed to improving its safety and manufacturing process to prevent the ongoing issues. 

The most recent results showed that its revenue fell by 15% to $16.6 billion, which is understandable because it had to ground many of its planes. Its loss jumped to over $1.4 billion, higher than what analysts were expecting. 

Despite these challenges, I believe that Boeing will weather these storms and turn around its business, especially under new management. We have seen these turnarounds work well in companies like General Electric, Rolls-Royce, and Danaher. However, this turnaround will take time.

The main benefit that Boeing has is that it exists in an oligopoly and Airbus cannot boost production faster. This means that companies that use Boeing are stuck with it. While its planes have come under scrutiny recently, it still has a long safety record.

Boeing stock price analysis

Turning to the daily chart, we see that the BA stock price bottomed at $159.64 in May as its woes were escalating. It formed what looks like a double-bottom pattern at that level and has moved to $174.

Boeing has not made a breakout yet and has remained below the 50-day and 100-day Exponential Moving Averages (EMA). That is a sign that bears are still in control.

Therefore, the stock will likely remain inside the support and resistance levels at $159.64 and $192. A bullish breakout will only be confirmed if it moves above the resistance at $192. If it happens, it will see it rise to the 50% retracement point at $213, which is 22% above the current level.