Boeing stock reached a 52-week high on Wednesday, extending its recent surge driven by both the commercial aerospace industry and positive market conditions.
Steady Rise in Boeing Shares
In midday trading on Wednesday, Boeing shares saw a modest 0.2% increase to reach $249.11 per share. If this gain holds until closing time, it will mark the sixth consecutive trading session in positive territory. Over the past month, the company’s stock has risen by approximately 22%. Notably, it has only closed in the red three times during this period.
Market Performance
On Wednesday, the S&P 500 experienced a 0.2% increase, while the Dow Jones Industrial Average remained flat.
Continued Success for Boeing
Boeing’s strong performance shows no signs of slowing down. On Tuesday, the company’s shares closed at a new 52-week high, and they reached yet another intraday 52-week high on Wednesday, trading above $250 per share.
Wall Street Backing
The credit largely goes to Wall Street for this impressive run. Over the past 30 days, two analysts from Deutsche Bank and RBC upgraded Boeing shares from Hold to Buy, while two others from Stifel and William Blair initiated coverage with Buy ratings. Positive ratings and upgrades from analysts often have a beneficial impact on a stock’s performance.
The Current State of the Commercial Aerospace Industry
The resurgence of the commercial aerospace industry is contributing to Boeing’s success. Despite the U.S. industrial economy experiencing a year-long contraction according to the manufacturing purchasing managers index, the aerospace sector is undergoing its own positive cycle. After facing setbacks due to COVID-19-related demand declines and supply-chain challenges that hampered production, the industry is now seeing growth.
Projections for Boeing Deliveries
Boeing’s delivery projections are optimistic. It is expected to deliver approximately 520 planes in 2023, 700 planes in 2024, and 800 planes in 2025. These figures stand in contrast to the record-setting year of 2018 when the company delivered 806 planes before the pandemic hit and the grounding of the 737 MAX jet took place.
Surging Deliveries Forecasted to Boost Boeing’s Free Cash Flow
Analysts are predicting a significant increase in Boeing’s free cash flow as a result of higher deliveries. Projections indicate free cash flow of $3.3 billion for 2023, $6 billion for 2024, and $9.5 billion for 2025.
These improved figures are expected to have a positive impact on stock prices, particularly towards the end of the calendar year when financial models and valuations are updated by analysts.
One such analyst, Richard Safran from Seaport, has expressed his continued support for Boeing stock. Although he did not change his rating, Safran raised his price target to $287 per share from the previous $246. The key adjustment in his analysis was the valuation of Boeing at around 15 times the estimated free cash flow for 2026, a significant difference from his previous target which was based on the 2025 forecast.
Market data from the past month reveals that Wall Street has adjusted its average target price for Boeing stock to just below $260 per share, up from slightly under $240.
Investors should consider certain implications arising from Boeing’s stock price run in December. It is advisable to seek reasonably priced stocks in sectors witnessing rapid improvement, although identifying such opportunities may prove challenging.
Despite this recent surge, Boeing stock remains approximately 43% below its all-time high closing price of $440.62 on March 1, 2019. In isolation, this figure does not necessarily indicate a bargain.
At that time, before the setbacks with the MAX aircraft and the pandemic, Wall Street analysts expected Boeing to generate a free cash flow per share of approximately $30 in 2020. In March 2019, the stock was trading at a multiple similar to what Safran now suggests may be achievable by 2024.