Please ensure Javascript is enabled for purposes of website accessibility

Why Boeing Stock Popped 6.5% This Morning

By Rich Smith - Mar 23, 2020 at 10:57AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It's finally time to buy Boeing, says Goldman Sachs.

What happened

Shares of aerospace giant Boeing (BA -0.18%) fell as far as $89 last week before rebounding to close the week at $95.01, which was still down a staggering 72% over the past month.

And yet, in one analyst's view, this spells opportunity.  

Boeing 737 MAX in flight

A Boeing 737 MAX. Image source: Boeing.

So what

Over the weekend, reports, analysts at Goldman Sachs announced that Boeing stock has fallen far enough to finally justify a buy rating, sending shares up 6.5% in early morning trading on Monday. As of 10:35 a.m. EDT today, it was still up 3.2%.

"The extreme challenges facing [Boeing] are well-known and widely discussed," Goldman said, and at this point, "sentiment is near an all-time low," as are expectations, "and a lot of bad news is priced in." Now, investors are worried if Boeing can simply remain solvent through the coming recession.

In this regard, though, Goldman is unequivocal, insisting that air travel will be "as popular as ever" once the COVID-19 outbreak is resolved (says, and that Boeing will remain in business through the crisis. Goldman has crunched the numbers and determined that between the $10 billion in cash Boeing had on hand at the time of its last earnings report, the $13.8 billion in loans it has taken out since, and the $4.6 billion a year saved from suspending its dividend, the company can survive going even "deeply negative" on free cash flow this year.

Now what

Goldman assumes that Boeing won't deliver a single 737 MAX before Q4, and that airlines that had ordered the plane will defer deliveries until at least then. 

But in other respects, Goldman said, "the news could turn more positive, if travel bans eventually let up, if the U.S. federal government provides assistance to the airlines and separately to the U.S. aerospace manufacturing ecosystem." Furthermore, there's at least a chance that air travel regulators will approve the 737 MAX for a return to flight in the interim. Even if no airlines actually buy the plane before Q4 (because demand for air travel is so low right now), that would be a catalyst that could lift Boeing stock.

Goldman Sachs now values Boeing stock at $173, in addition to rating it a buy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

The Boeing Company Stock Quote
The Boeing Company
$138.45 (-0.18%) $0.25

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.