Boeing on Wednesday struck a deal with the Department of Justice to pay $1.1 billion in order to avoid prosecution for two deadly 737 MAX crashes. Analysts have been raising views on the jet manufacturer as deliveries improve. Boeing stock, up 64% from an April low, now has the strongest earnings outlook among Dow Jones stocks over the next four quarters.
Boeing on Wednesday reached a deal to invest $455 million to bolster its safety, quality and compliance programs, according to a SEC filing. The company must also pay $444.5 million in additional compensation to the beneficiaries of the crash victims for Lion Air Flight 610 and Ethiopian Airlines Flight 302.
Boeing is also required to pay a $487.2 million criminal penalty, half of which was paid in 2021.
Boeing in the filing admitted that it deceived the FAA Aircraft Evaluation Group. The Dow Jones manufacturer also agreed to continue improving its compliance and ethics program and to retain an independent compliance consultant.
The new deal means Boeing avoids a trial scheduled to start on June 23.
The two crashes in October 2018 and March 2019 killed 346 people.
Boeing Earnings To Accelerate
Boeing also has the strongest earnings outlook among Dow Jones stocks over the next four quarters. Analysts polled by FactSet expect Boeing to report a loss of 79 cents per share for Q2, improving from a decline of $2.90 per share last year. That growth is expected to accelerate to a loss of 22 cents per share in Q3, before turning positive to 13 cents per share in Q4. FactSet expects earnings of 55 cents per share by Q1 2026.
That represents about 94% earnings growth for 2025. Analysts expect earnings to jump 399% for 2026.
Analyst Views On Boeing Stock
Jefferies on Wednesday raised its price target on Boeing stock by $20 to $250 and kept a buy rating on the shares, The Fly reported. The firm noted that May deliveries stand at 45 aircraft, which was in-line with April's figures and up slightly from the 43 per-month average from the first three months of the year.
Boeing has made progress to stabilize production and establish carve-outs to alleviate its free cash flow burn. CEO Kelly Ortberg last week said that 737 MAX production is nearing 38 planes per month, which is the limit set by the Federal Aviation Administration. Boeing hopes to lift it 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.
BofA on Monday upgraded Boeing stock to buy from neutral and hiked its price target to a Wall Street high of 260 from 185, The Fly reported. Analyst Ronald Epstein wrote that Boeing aircraft have emerged as a favored negotiating tool for the Trump administration in recent trade deals. Agreements with the U.K., Qatar, the United Arab Emirates and China have set a precedent for future global negotiations, to Boeing's benefit, Epstein wrote.
BofA wrote that the renewed focus across the company's portfolio, combined with the "favored trade mechanism" status presents investors with a buying opportunity.
New Orders
However, Boeing may have lost out on a may have lost out to rival Airbus on a major order from China. Bloomberg reported late Wednesday that China is planning to order up to 300 jets from Airbus as soon as July. China has historically relied more on Airbus for its fleets. Air China, China Southern Airlines, and China Eastern Airlines, which account for more than half of flight capacity in the country, all fly more Airbus planes than Boeing aircraft in their fleets.
Elsewhere, Air India is in talks with Boeing and Airbus for a new aircraft order, Reuters reported Sunday night. The discussions revolve around an order for 200 extra single-aisle planes as part of the airlines multibillion dollar revamp, industry sources told Reuters.
The order would be on top of a massive 2023 deal, where Air India placed an order for 470 planes from Airbus and Boeing. That was followed by another 100-jet deal with Airbus.
The current discussions could involve hundreds of aircraft across various sizes, and could include a previously-reported plan to acquire more wide-body planes.
Vietnam Airlines is on the verge of finalizing an order for 50 Boeing 737 Max jets, Reuters reported separately on Monday citing an unnamed company executive. The deal stems from a provisional agreement that was signed in 2023 and is expected to be completed "very soon."
Vietnam Airlines may require as many as 100 new narrow-body planes by 2035 as part of a fleet renewal and expansion initiative. In a separate move in April, Vietnam Airlines signed a memorandum of understanding with Vietcombank for financial support related to purchase of 50 narrow-body jets, according to Reuters. That memo did not specify a manufacturer for the planes.
Boeing Stock
Boeing stock eased 1.3% Thursday.
BA shares have rallied 62% from their April 7 low of 128.88.
Boeing stock is trading above an aggressive 209.66 buy point from a very short consolidation. The move offers an alternative entry after Boeing became extended from a double-bottom base with a 184.40 buy point. Boeing broke out from that pattern on April 28.
Boeing's 21-day average true range ratio is 2.39%.
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.
BA stock is up more than 18% this year.
You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison
