Aerospace & Defense

The 2016 Bullish and Bearish Case for Boeing Is for Clear Skies Ahead

Now that 2015 has turned into 2016, it is time to see what analysts and strategists on Wall Street are calling for in 2016. Despite the year getting off to a bumpy start, and despite investors having bought every pullback, the same investors also know that 2015 was the year that the six-year bull market was interrupted.

The Dow Jones Industrial Average closed out the year at 17,425.03, for a decline of 2.2% for the year. The Dow’s performance does not account for dividends, but Boeing Co. (NYSE: BA) closed out 2015 at $144.59, for a total return of just over 14%, if you include its dividend adjustments.

For the year ahead, the consensus analyst price target for Boeing from Thomson Reuters is $163.78. If the analysts are correct, the expected total return for the stock would be 15.8%, if you include its dividend yield of 2.52%.

Investors of course need to keep in mind that 2016 has gotten off to a very bumpy start. Boeing shares may have been $144.59 at the end of 2015, but its shares were trading down at $138.00 on just the third day of this year’s trading.

While Boeing has been a story of the 787 Dreamliner in the past few years, the reality is that Boeing can be considered a defense company again rather than just an aerospace company. After all, the conflicts around the world are good for business, and Boeing can easily be among the big defense contractor winners at any time. Boeing can also be a winner in the privatization of space ahead.

One issue that should stand out for Boeing shareholders in 2016 is that the company’s dividend hike and stock buyback expansion absolutely blew out expectations to the upside. This has yet to translate into gains for the stock, but the reality is that Boeing is planning on returning more capital to its shareholders.

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