Dow component Boeing Co. (BA) is trading higher by nearly 2% in Tuesday’s pre-market after a Cowen upgrade set off another round of buying interest. The rally is adding to gains posted since the aerospace giant bounced at 200-day moving average support near 220 about three weeks ago. Even so, the stock is still trading more than 25 points below the 52-week high at 279, posted in mid-March, and nearly 200 points below 2019’s all-time high above 400.
Dreamliner Production Issues
The company suspended deliveries of the 787 Dreamliner last week, renewing a 5-month suspension triggered by chronic production issues. The FAA has requested more information about proposed solutions to address quality control, in an abundance of caution following the worldwide grounding of the 737-MAX jetliner in 2019. That plane finally returned to the skies in the fourth quarter of 2020, lifting a dark cloud that kept many investors on the sidelines.
Cowen analyst Cai von Rumohr upgraded Boeing from ‘Market Perform’ to ‘Outperform’, noting “Fast improving air traffic is bolstering aircraft demand; and while lingering FAA oversight and timing of China’s MAX approval limit upside to 2021, 2022-24 look brighter. We see potential for CFPS to reach $21/share by 2024. We’re upgrading the stock, which is likely to trade on traffic expectations, with a price target of 290”.
Wall Street and Technical Outlook
Wall Street consensus has grown more bullish since the MAX re-certification, with an ‘Overweight’ rating based upon 12 ‘Buy’, 2 Overweight, and 10 ‘Hold’ recommendations. In addition, three analysts recommend that shareholders close positions. Price targets currently range from a low of $165 to a Street-high $314 while the stock will open the session about $18 below the median $270 target. It’s probably no coincidence the high target is situated close to the March rally peak.
Boeing failed a breakout above 2018 resistance at 394 following the Ethiopian crash in March 2019 and entered a downtrend that broke a trading floor near 300 in February 2020. The subsequent recovery unfolded in three rally waves, reversing at the 50% selloff retracement level in March 2021. That ceiling could get tested in coming weeks, with a breakout opening the door into much stronger resistance above 300.
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Disclosure: the author held no positions in aforementioned securities at the time of publication.
This article was originally posted on FX Empire
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