Aerospace & Defense

Why Investors Still Remain So Bullish on Boeing in 2018 and Even Out to 2019

Boeing Co. (NYSE: BA) may set a new modern era record. After being the best total return stock in 2017, Boeing is leading the Dow’s charge in 2018, as well as the best stock performer in the Dow Jones industrial average. Furthermore, Boeing is still expected to continue generating upside for its investors over the coming year.

At the start of 2018, 24/7 Wall St. ran its 2018 bull-bear analysis on Boeing. The aerospace and defense giant generated a 2017 total return of 89.4%, 20 points higher than the second-best performer and nearly double the third-best. Its stock closed 2017 at $294.91 a share (unadjusted for dividends), above the 12-month consensus price target at the time of $292.83.

Now after almost two months of trading in 2018, Boeing is the Dow’s top stock again, with a gain of better than 20%. And dividend investors and buyback investors love Boeing too. Boeing raised its annual dividend to $6.84 in December, a 20% boost on top of a 30% boost a year earlier. Its yield is roughly 2%, but it’s far better on a cost-basis yield for long-term investors who have stuck with Boeing.

Now Boeing has a consensus analyst target price of $386.78, which is up over $40 more from the consensus analyst target just one month ago. Keep in mind that there was a substantial sell-off earlier in February, and Boeing did not escape the market’s black hole before it finally recovered.

With shares at $367.00, that $386.78 consensus masks some of the upside from more recent analyst calls. The median price target is up at $400. Some analysts see Boeing rising significantly higher than that $400 mark. The highest consensus target price is all the way up at $470.

The news flow keeps working in Boeing’s favor as well. The Air Force One contract looks locked. The company may be back on Canada’s good side again. It still outshines rivals on new plane orders. And Boeing keeps targeting supplemental and bolt-on acquisitions. Boeing’s plane backlog alone is now close to seven years of production, and this adds up into the hundreds of billions of dollars that are already penciled in.

Boeing was upgraded by analysts all through late 2017. Then ahead of and after earnings, it kept getting upgraded. In fact, analysts have seemed to be stepping all over themselves to raise expectations, as Boeing is expected to increase jet production, make strategic acquisitions, have strong defense trends and to be a tax reform winner.

There have been roughly a dozen key analyst target hikes in 2018, and this is one of the companies firing on all cylinders. What this translates to is a positive view for 2018 and into 2019 for those analysts who have 12-month and longer price targets. Some of the price target changes from the more optimistic analysts seen in recent days and weeks were as follows:

  • Berenberg raised its target to $415 from $395.
  • Bernstein raised its target to $422 from $402.
  • Cowen raised its target to $415 from $320.
  • Credit Suisse raised its target to $443 from $375.
  • Merrill Lynch raised its target to $470 from $395.

Boeing most recently closed at $363.48 and was last seen trading at about $367.00. Its 52-week range is $173.75 to $3369.89. Boeing also has a market cap of $216 billion.

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