Boeing stock surged on an upgrade and a major price target hike Friday, making it one of the day's top performers in the Dow Jones Industrial Average. Concerns still loom over the manufacturer following a deadly plane crash earlier this month.
Rothschild & Co Redburn on Friday upgraded Boeing stock to buy from neutral, The Fly reported. "After years of troubles, things seem to be taking a more positive turn for Boeing and the company appears healthier," the firm wrote in a research note.
Rothschild & Co wrote that Boeing's improvements in finance, culture, industrial safety and processes, combined with production acceleration, "should enable a reassessment of the stock in the market." The firm predicts that upside to 737 and 787 deliveries could add $1.7 billion in annual posttax cash profits compared to current forecasts. That could send Boeing's free cash flow above $14 billion by the end of the decade, and clear its historical peak of $13.6 billion from 2018.
Rothschild hiked its price target on Boeing stock to 275 from 180.
Boeing previously received an upgrade and price target hike from BofA at the beginning of the month, due to its status as a favored negotiating chip for the Trump administration in recent trade deals.
Boeing CEO Kelly Ortberg in late May said that 737 MAX production is nearing 38 planes per month, which is the limit set by the Federal Aviation Administration. The company hopes to lift the limit to 47 by the end of the year. Output of 787s is going from five to seven per month, after completing a review with the FAA.
Air India Crash Investigation Ongoing
However, there are still concerns about operational safety. An Air India Boeing 787 Dreamliner on June 12 crashed after takeoff from Ahmedabad in western India. Although the investigation is still ongoing, experts speculate that there was a thrust issue stemming from the engines, which were manufactured by GE Aerospace.
The crash resulted in the death of 260 persons, Reuters reported earlier this week after recovery efforts concluded. Only one of the 242 passengers and crew onboard the flight survived.
Both Boeing and GE Aerospace opted out of attending the Paris Air Show earlier this month following the crash.
Investigators on Thursday downloaded the black box data from the plane, and will be able to use the information to help determine a cause, according to reports.
Boeing Stock
Boeing stock surged 5.9% Friday, rebounding from support at the 10-week moving average and climbing toward its June 9 high of 218.80.
BA shares have rallied about 66% from an April 7 low of 128.88. The stock has a 21% gain so far this year.
Boeing's 21-date average true range is 2.61%.
The average true range is a metric available on IBD's MarketSurge that gauges the characteristic breadth of a stock's behavior. Stocks that tend to make large jumps or dives in daily action, the kind that can trigger sell rules and shake investors out of a stock, have a high ATR. Stocks that tend to make more incremental moves have lower ATRs.
With the S&P 500 and Nasdaq now in a power trend, investors can buy stocks with ATRs up to 8%, though they should be wary of being too concentrated in high-octane names.
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