Boeing (BA) stock is still on its path to a full recovery.
Its previous downturn was not due solely to the COVID-19 pandemic: shares in the aviation giant were also hammered by the grounding of the Max 737 before the outbreak swept the world in 2020. (See Boeing stock analysis on TipRanks)
The company has made progress in overcoming both hurdles, as was apparent in the stock’s partial rebound over the past twelve months. Nonetheless, based on its own estimates for when air travel will fully bounce back, a complete return to the “old normal” may not occur for at least another two years.
This points to sideways price movement through the rest of 2021. In that case, it might be best for investors to continue to take a wait-and-see approach with the stock. Alternatively, there may be a path for the stock to fully close the gap between its pre-COVID and post-COVID prices.
Boeing shares could start making a sharp ascent once again if travel reopens sooner than expected, such as in the second half of 2021.
BA Stock and Its Continued Challenges
COVID-19 has been just one of the challenges affecting the company over the past few years. The cratering of demand due to the virus was piled on top of the headwinds caused from the grounding of its 737 Max aircraft. It was grounded in 2019 and 2020, in the aftermath of two fatal accidents. To top it all off, a newly-discovered electrical issue further delayed the relaunch of Boeing’s flagship aircraft.
On the upside, recent reports say the company will be able to increase 737 production more quickly than expected by later this year. Thus, the company might be in the clear when it comes to headwinds for this previously-problematic aircraft.
That’s one hurdle down, but one more to go. The wide distribution of vaccines in North America and Europe may signal that a complete rebound for travel demand is just around the corner. Yet, as mentioned above, experts do not expect the full recovery of the travel industry to take place until at least 2023.
On the other hand, what if these projections too conservatively estimate how quickly the status quo returns to passenger aviation? Much of the data on the air travel recovery indicates that the rest of 2021 could be more or less a wash. Yet, recent booking data points to pent-up demand driving strong travel trends. This could indirectly give a major boost to BA stock.
Shares Could Take Off Sooner Than Expected
As of now, 2023 may be deemed the year aviation returns to normal. This is the target Boeing has set for demand to return to pre-pandemic levels. It’s also the year several major airlines anticipate their results to finally reach their prior high-water marks.
On the other hand, if pent up demand for air travel results in stronger-than-expected travel numbers and financial results for the airlines, investors could soon start pricing in a full recovery in the BA stock price.
With the sector more confident heading into 2022, demand for new aircraft should greatly improve, giving the still hard-hit stock a path to return to prices well above $300 per share (shares trade for around $247 per share today).
What Analysts are Saying About BA Stock
According to TipRanks, BA stock has a analyst consensus rating of Moderate Buy. Out of 14 analyst ratings, 7 rate it a Buy and 7 analysts rate it a Hold.
As for price targets, the average analyst price target on BA stock today is $270 per share, implying around 9.3% upside from today’s prices. Analyst price targets range from a low of $229 per share, to a high of $310 per share.
Investors Await New Data
As seen from the stock’s partial rebound from its 737 Max and pandemic-related losses, investors are still taking a wait-and-see approach with Boeing shares.
This is likely to continue, unless the best-case reopening scenario plays out in the latter half of the year. At Boeing, more is working for it than against it right now. Therefore, shares could be at minimal risk of selling off from their current price levels.
As some uncertainty remains on the table, investors should expect further sideways trading for BA stock until it’s clear the situation’s changing.
Disclosure: Thomas Niel held no position in any of the stocks mentioned in this article at the time of publication.
Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.