The Boeing Company (NYSE: BA) is one of the shining stars of the Dow Jones companies in 2023. The stock is up 16% as we approach the midpoint of 2023. This continues a rally that has pushed BA stock 90% higher in the last 12 months. However, with the stock pushing up against its 52-week high it’s fair for investors to ask if there’s still time for investors who have been on the sidelines to take a long position in Boeing
One reason to believe it may be is that despite the impressive rally, BA stock is still down 34% in the last five years. And it’s almost 50% down from the all-time high the stock reached in 2019. It may be a long time before the stock reaches those lofty levels, if it ever does. But there’s reason to believe the rally may not be over.
The Worst May be Behind It
By now, the troubles that have befallen Boeing are well known. The company’s production ground to a halt in 2019 after two plane crashes forced the manufacturer to suspend production of its 737 MAX airliner. That was followed by the global pandemic that suspended most airflight and caused Boeing to take the necessary step of suspending its dividend.
And, like many companies, Boeing faced the same supply chain issues that held back many manufacturers. Plus, at least, initially the recovery for airline traffic was uneven.
But the latest reading on the consumer price index (CPI) suggests those days are long gone. Airline flights are an area where inflation remains sticky. And as long as consumers are willing to pay, airlines will be looking to upgrade their fleet of planes.
That’s evident in Boeing’s May delivery numbers. The company delivered 50 jets in May which included 35 of the 737 MAX variety, which is a significant source of cash for Boeing. The 50 jets delivered was a 43% year-over-year improvement. The airliner also said that it expects 737 MAX deliveries to average over 40 per month in the second half of the year.
Analysts and Institutions Are Bullish on BA Stock
In the past year, Boeing institutional ownership is weighted about 3:1 in terms of dollars. And for the last eight quarters, buying activity has outweighed selling activity.
Another bullish point for investors to consider is analyst sentiment. The Boeing analyst ratings on MarketBeat show Boeing with a Moderate Buy rating. The consensus price target doesn’t suggest much growth. But recent ratings tell a different story. Jefferies recently maintained its Buy rating on BA stock with a price target of $250. In April, The Goldman Sachs Group (NYSE: GS) also reiterated a Buy rating and gave the stock a $270 price target.
Is Boeing a Buy?
For the reasons mentioned above, Boeing has been unprofitable for several years. That’s expected to change in late 2023 or in 2024. If the stock has been rallying without being profitable, it’s not hard to imagine that the stock has room to run.
The company has said it will prioritize stabilizing its balance sheet ahead of reinstating its dividend. However, this could be the beginning of a long-term cycle which could lead to growing free cash flow. That means an investment in BA stock today could lead to some growth now and a dividend later, which is the best of both worlds for many investors.