What happened

Shares of Boeing (NYSE:BA) gained 6% on Thursday morning after the aerospace giant was initiated as an "outperform" by RBC Capital. Boeing shares have lost more than half of their value year to date, but RBC's Michael Eisen sees the stock bouncing back, along with aircraft demand, relatively quickly.

So what

Boeing has been hit hard by the COVID-19 pandemic, which has forced it to dump its dividend and temporarily suspend some operations, and has caused its customers to halt expansion plans. Airlines have seen travel demand fall to near zero, leading them to cut flights and ground planes. That means less demand for Boeing jets and spare parts, causing the company to burn through $4.7 billion in the first quarter.

A Boeing 787 Dreamliner takes flight.

Image source: Boeing.

But RBC's Eisen is bullish on global commercial passenger traffic recovering, which he says will spark a multiyear period of high double-digit demand that should push Boeing's stock higher. He also believes Boeing's grounded 737 Max will be recertified in the third quarter, as Boeing has forecast, which will help Boeing to stem cash burn.

Eisen set a price target of $165 on Boeing shares, implying there is still 15% upside for the stock even after Thursday's gains.

Now what

I don't doubt there is long-term value in Boeing's shares, and given how far the stock has fallen and Boeing's relatively healthy liquidity position, it is quite possible the stock has already bottomed out and is on the road to recovery. If I disagree at all with Eisen, it is on the speed of that recovery.

Boeing itself has said it expects passenger traffic to take years to recover, and its CEO earlier this month said he thinks a major airline will "most likely" go out of business this year. I don't buy that conclusion, either, for what it's worth, but it appears the company itself is taking a conservative stance on future demand.

That conservatism seems appropriate to me. Even if air traffic does return in the second half of 2020 and accelerate into 2021, airlines that have taken on billions in added debt to weather the crisis are more likely to bring back grounded planes already in their fleet than to aggressively add new aircraft. That implies suppliers with heavy exposure to the aftermarket, or spare parts, business will recover faster than Boeing.

Even if Boeing shares are on the rebound, I still see better buys in aerospace right now.