Boeing Stock Forecast & Analysis: Is BA a Buy?

Written by Sean GraytokUpdated: 8th May 2022
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Let’s find out if BA is a buy in this Boeing Stock Forecast & Analysis.

Boeing Stock Forecast: Background 

Boeing Co. is a 105-year-old American multinational corporation that manufactures, designs, and sells the following:

  • Airplanes
  • Rotorcraft
  • Rockets
  • Satellites
  • Telecommunication equipment
  • Missiles

Boeing provides leasing and product support services too.

Boeing separates these operations into four segments: Commercial Airplanes (BCA), Defense, Space, and Security (DSS), Global Services (BGS), and Boeing Capital (BCC).

It is among the largest aerospace manufacturers and defense contractors in the world. Boeing is the largest exporter in the United States by dollar value.

Boeing Stock Forecast: Investment Potential

#1. National Security 

Boeing is a major component of the military-industrial complex. It provides several goods and services for the military that contribute to matters of national security. 

In addition to Lockheed Martin, Northrop Grumman, and Raytheon, Boeing has a vested interest in protecting the free world, specifically the U.S. 

In 2020, approximately 30% of Boeing’s revenue ($27.4 billion) came from its Defense, Space, and Security segment in the form of government contracts.

There is no shortage of funding for these contracts; behind social security, the U.S. defense budget is the country’s largest expense, amounting to an estimated $934 billion for FY 2021.

The following describes Boeing’s success in the defense sector:

Little Competition + Guaranteed Government Expenditure + Recurring Demand

There are only a handful of companies on the industry side of this complex.  

#2. Travel Demand

Boeing’s main business segment, Commercial Airplanes, accounts for half of its total revenue, coming in at $45.6 billion in 2020.

This segment was ravaged during the pandemic as domestic and international flights were grounded, resulting in little demand for the airline products and services that Boeing provides.

However, the need for Boeing’s core offerings will ramp up as the global economy reopens and travel resumes.

#3. Too Big to Fail

As previously mentioned, Boeing plays a critical role in the national security of the United States. Moreover, it is vital to the country’s global trade and commercial travel.

More than 10,000 Boeing-built jetliners are in service worldwide, which is nearly half the world fleet. An astonishing 90% of the world’s cargo is carried onboard Boeing planes.

The U.S. economy cannot operate without its airliners, who would struggle to operate without Boeing — the government has set a precedent of bailing out the airline industry during periods of turmoil.

Boeing is too big to fail and one of the more apparent versions of crony capitalism in the markets today.

Boeing Stock Forecast & Analysis: Earnings

Let’s look at Boeing’s Q4 2021 earnings and hear from the company’s executives:

  • Loss per share: $7.69 a share vs an expected loss of 42 cents a share
  • Revenue: $14.79 billion vs $16.59 billion expected, down 3% year-over-year
  • Net Loss: $4.16 billion

Boeing CEO Dave Calhoun answered questions on a wide range of topics, such as 787 delays, China possibly lifting its ban on the Max, supply chains, travel’s recovery, and more.

Most of the call consisted of the various delays and/or groundings of various aircrafts. 

On the bright side, Calhoun said he expects travel demand to rebound sharply in the spring and summer months of 2022. 

Shares fell as much as 4.8% following the call.

The stock is trading on the lower end of its $183 to $278 yearly range. 

Boeing Stock Forecast: The Competition

While there is a limited number of companies in this space, competition is fierce. Here are Boeing’s top competitors:

  • Airbus (EADSY)
  • Raytheon (RTX)
  • Lockheed Martin (LMT)
  • United Technologies (UTX)
  • Northrop Grumman Corporation (NOC)
  • GE Avionics (GE)
  • General Dynamics (GD)
  • Safram (SAFRY)
  • Bae Systems (BAESY)

The Commercial Aircraft Company of China (CAMOC) represents a massive threat to Boeing’s business in China.

Historically, Chinese airliners have relied on Boeing and Airbus for commercial airplanes.

COMAC is awaiting approval of its aircraft and has partnered with U.S.-based General Electric.

Boeing Stock Forecast: The Bear Case

#1. Continued 737 Struggles

The 737 MAX fleet was grounded in March 2019 following two crashes that killed 346 people.

Investigations revealed that Boeing covered up a known defect in the planes’ Maneuvering Characteristics Augmentation System. Boeing was charged with fraud and paid $2.5 billion in fines.

The grounding halted the delivery of about 450 planes during the investigation. Uncertainties caused production to slow as well.

Twenty months after the crashes, the FAA cleared the MAX to resume service, subject to a list of mandated design and training changes.

However, the MAX continues to struggle. On April 29th, 2021, the FAA announced an investigation into the cause of a manufacturing problem that resulted in an electrical grounding issue on multiple 737 MAX planes.

Boeing called for more than 100 MAX planes to be taken out of service earlier in April for reasons unrelated to the 2018 and 2019 crashes.

#2. U.S. and China Trade Relations

Boeing’s CEO Dave Calhoun is calling on the Biden Administration to restore trade relations with China, citing the importance of China’s aircraft orders for the long-term of the company.

The U.S. aerospace industry depends heavily on Chinese orders. Boeing sells nearly a quarter of its jetliners to China.

While most countries have followed the FAA’s guidance on the MAX, China has yet to recertify it for flight.

Some “industry observers” believe this delay is a retaliation by Chinese authorities.

Calhoun emphasizes the “importance of getting the relationship right” and is confident a restored order flow from China will help Boeing’s production rates.

Boeing Stock Allocation in Your Portfolio

Determining your optimal allocation to Boeing stock depends on your investing goals and time horizon. This means BA might be great for some and bad for others.

Regardless, the following questions might help you decide on the right amount of Boeing stock to buy if any:

  • Is BA’s investment performance too correlated to the success of the 737 Max?
  • Can Boeing recover from its 737 crashes and mishaps?
  • Will other defense contractors destabilize Boeing’s position?
  • Will Boeing ever reach its 2019 highs again? And does it have to?
  • Will Boeing play a profitable role in the developing space exploration market?
  • Can Boeing’s Commercial Airplane segment thrive if U.S. & China trade tensions continue?
  • Is there better upside in other investments?
  • Is Boeing on the right side of aerospace automation?
  • Is there another space stock or space ETF that is more attractive right now?

Boeing Stock Forecast: FAQs

Is Boeing a good stock to buy?

Many consider Boeing (BA) a good stock to buy because it is deeply entrenched in the airline and defense industries. It manufactures planes for airliners to fly and provides defense, space, and security services for the United States military.

Is Boeing stock a buy, sell, or hold?

Boeing stock is a buy, sell, or hold depending on various factors, most recently the status of its 737 MAX fleet. However, Boeing stock’s recent decline might be a good buying opportunity for long-term believers in the company.

Will Boeing ever recover?

Boeing stock reached as high as $440 per share before falling to $95 in just a few months. It’s uncertain whether or not Boeing will ever recover to those highs, but it’s up 167% from those lows just over a year ago.

Does Boeing stock pay a dividend?

Boeing does not pay a dividend and is unlikely to do so anytime soon. It is currently a cash flow negative business and does not have excess capital to distribute to shareholders.

Bottom Line: Boeing Stock Forecast

If Boeing goes bottom-up, we’ll probably have bigger problems than the price of its stock.

But that, in-and-of-itself, doesn’t necessarily make the stock a buy.

Keep Reading:

This article is for informational purposes only, and it is not intended to be investment advice. Read our editorial guidelines and public equities research methodology to learn more about how we researched Boeing (BA) stock. 

Sean Graytok
Sean Graytok

Sean Graytok is our Co-Founder and leading expert in investing and financial management. His work has been cited in leading industry publications, such as InvestorPlace and Business Insider. Sean is interested in the people and technologies that are improving the world.