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Is Boeing Stock A Good Buy In 2021?

May 06, 2021 3:40 PM ETThe Boeing Company (BA) Stock38 Comments


  • Boeing's stock price has been badly hit by the 737 MAX grounding and COVID-19 in the past two years, after reaching an all-time share price high in March 2019.
  • BA's path to recovery does not seem to be that smooth, with the 737 MAX still being grounded in China and facing new electrical system issues.
  • Market consensus expects Boeing to turn profitable and cash flow positive by FY 2022 and for its revenue to exceed 2019 levels by this year, which seems too bullish.
  • I don't think Boeing is a good BUY in 2021, given uncertainty over new 737 MAX issues and the pace of international travel recovery.
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Boeing Announces Its Suspending 737 MAX Production In January
Photo by Stephen Brashear/Getty Images News via Getty Images

Elevator Pitch

I have a Neutral rating for The Boeing Company (NYSE:BA).

Boeing's stock price has been badly hit by the 737 MAX grounding and the coronavirus pandemic in the past two years, after reaching an all-time share price high in

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The Value Pendulum profile picture

The Value Pendulum is an Asian equity market specialist with over a decade of experience on both the buy and sell sides.

He is the author of the investing group Asia Value & Moat Stocks, providing ideas for value investors seeking investment opportunities listed in Asia, with a particular focus on the Hong Kong market. He hunts for deep value balance sheet bargains and wide moat stocks and provides a range of watch lists with monthly updates within his investing group.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (38)

Bengales, you better find somewhere else to put your money because 125 dollars/ share is a low probability number. 1,7 million plus domestic flying customers last weekend. I believe numbers will exceed two million/day early summer. If cruising opens in Fla. this summer, domestic volumes will show a step increase.
@Old Wizard I think when people make comments like that they won't invest when is low and they won't invest when is high. They are afraid. Nothing is risk free.
Boeing is a great American company. I dont get how analysts cant seem to stop putting down Boeing. I would like analysts to focus on putting down companies with ridiculous p/e ratios and companies trading at such high ridiculous values. How about an article on the nonsense of GME. Leave the decent companies alone and stop financially hurting individual investors who actually invest in decent companies.
I choose to remain optimistic. When it was $120 or $150 many did not buy because the stock was not worth $100. Now it is over $200. I'm optimistic, the company's issues are just opportunities to make its products better.
I don't trust BA's current management. They're making too many mistakes for their own good, and they're showing the complacency that GM's management did back in the 1970s with cars. They're letting flawed airplanes leave their production line, and they don't care. Only the FAA cracking the whip over their head and government regulators in various countries are making them improve their aircraft. It shouldn't be that way. BA's management itself should care whether they're making flawed airplanes, and they don't. BA did not used to be this stupid a company.
J.R. Morgan profile picture
@Investor 3000 very well said. I see the parallels with Detroit and that is not good.
bengalesq profile picture
No PE. No growth. Trying desperately to weather the multiple front storm. Too much uncertainty with not enough upside at this price. I will buy around $125 under these circumstances which seems not to be in the cards. Perhaps our paths will cross again on another day. This stock is not worth 75% of what it was before the world blew apart. Just not.
I tend to believe that current projections for commercial air travel are overly pessimistic. I believe domestic air travel will approach pre pandemic levels by Easter of next year. International traffic is too unpredictable due to a host of reasons some of which are not related to the pandemic. On balance, Boeing’s financial should be significantly better next year.
@Old Wizard Sure, it can not get any worse
although you can not completely exclude it
@CeEstMoi It can certainly get worse. Hopefully it won't.
VillageElder profile picture
Video Conferencing has been around since the 1970's (by AT&T) but it never caught on. Business travel was viewed as a mini-vacation perk at many companies and government agencies. Additionally, Video Conferencing had its associated learning curve with its new technology that many employees and some employers avoided - recall how personal computers on work desktops were avoided, at first, in many organizations.

Now along comes a pandemic and many employees are given the choice of working from home (by learning and using remote conferencing equipment and software) or don't work and don't get paid. So not only have been employees been forced into adopting to a remote work routine but their employers have noted the cost saving advantages to them.

Looking forward (as good investors should always do) we need to ask: "What will become of business travel after everything returns to the 'new normal'?"

Additionally ask: "What changes can be expected for pleasure travel?"

This all needs to be factored into any investor future expectations about Boeing, Airbus, and all the associated businesses that serve the airline industry (food catering, lodging, auto rental, et al). What will eventually become of airline terminals and the surrounding communities that support them?

The military aircraft industry segments will likely go along unchanged.

Pre-pandemic, business travel accounted for some 15% of the passengers carried and ~75% of the profits.

Sure, some will come back. How much, is the question. How much they will get in revenue, is also a factor. Some are pointing out how business class is full, on some flights - but a quick check of the prices paid for that seat, is nowhere near what it used to cost. Airlines are having to discount their prices to get bums in seats.
J.R. Morgan profile picture
@VillageElder great points. A SWAT analysis would likely uncover more threats. The world is begging for any options to commercial air travel and there are some on the horizon.
"Boeing has a relatively broader range of wide-body aircraft or twin-aisle aircraft with existing models like 747, 777X, and 787"

No one is buying the 747 anymore, likes it counterpart - the A380. The 777X program has dropped it's order book to below 200 units and is down some $6.5 billion on a charge BA took in Q4 2020 (i.e. no one wants it) and the 787 is still down some $17.5 billion in sunk costs.

The widebody segment is the 777X/787 vs the A330/A350, with a 50/50 split. Boeing is down to 33% in the narrowbody segment. The self inflicted 737 grounding has cost them over $20 billion.

Interest expense is $2.8 billion a year. Do you know how many aircraft Boeing has to sell to cover that, alone?

Oh - and China will start delivering the C919 for domestic service later this year. There is your third player in the game.
tszabo86 profile picture
@crankypants007 would you step in a Chinese made jet? I rather step in a 737 MAX first
Look at all the narrowbody aircraft used for domestic service in the US.
Doesn't matter what you or I or anyone else thinks. China has over a billion people, ~4 times the market of the US.

The C919 can get certified for domestic service and THOUSANDS can get ordered and used for domestic service for Chinese people. That's thousands that will not be ordered from Boeing or Airbus. The Max grounding has given COMAC two years of catch up.
@crankypants007 "The Max grounding has given COMAC two years of catch up."

Diversion of Boeing's Y1 program has given COMAC 10 years of catch up.
TDune75 profile picture
This is one of the better highly comprehensive recent analyses of BA and I agree that it’s probably a “hold” at current valuations. Nice work by the author.

Not addressed was some forecasted assumptions of future business travel, both domestic & Int’l. Maybe the author could provide a comment below or address in a future article?

IMHO & having done so much business travel throughout my career, I believe COVID has permanently changed this aspect of air travel. Meaning, less business travel in the 2020’s than prior decades. Even more reason not to buy BA at this juncture unless it goes below $150.
I'm hoping to get to $275 so I can unload what I have left.
Cylontymany profile picture
Boy! I am surprised at all the dum bells that want to jump in and think there going to $300 anytime soon! Lol
@Cylontymany It will get there this year or next, but it will get there. People won't stop travelling forever!!!
No, 2020 was the year 😀
Abigsoxfan profile picture
The best time to buy any stock is when the price is low, when the news seems all bad, but intelligent investors can envision better news on the horizon. I initially bought this stock in April 2003. When all said the airlines were dying. When they all saw a terrible future. But I saw two things. 1) Boeing is not just a commercial aircraft manufacturer, but a good sized defense contractor and producer of vehicles that can find their way into space. 2) India and China had huge populations. Mostly dirt poor. But both had burgeoning middle classes. Where every 15-25 years a population the size of the USA would be entering the middle class. And these folks (along with many other throughout the world) would go from 0 flying to a great deal of flying. So I bought the stock at $26.25. And was laughed at by many. 1 & 2 above still apply. The stock is well, well off it's all-time highs. If one waits too long for good news, it will be back over $300. Not too long ago for a brief period it was under $150. That was a great time to buy, but most were too timid. Right now, under $250 is another time to not be too timid. Boeing will be back above $300. It will most likely reach $400 or $500. Today's buying opportunity will not last forever. Especially if one waits for all the good news to be baked into the stock.
Excellent points all around. In addition, many think a company needs to get back to its former ops numbers (prior high ~$440) in the short term but in actuality, whether BA’s current situation or stocks coming out of a recession, investors are buying the continued growth coming over the next few years.

Add that fuel prices have gone crazy (and the dollar is expected to devalue with all the crazy spending going on). As oil / fuel is priced in dollars that would mean even higher fuel prices.

Most of BA’s product provides 20-25% fuel efficiency gains and that gets the airline cfo’s excited - and yes we will see the economy opening up on all fronts. I see them as a buy in the $250-260 range and under with a ye target in the $300 range - another 15% or so next year.
An 8 year ba sh / 2nd largest of 51 stocks.
@Abigsoxfan Wow that is exactly what I think buy when there is bad news and price is low. Unfortunately, most people buy when there is good news and the price is high.
@JDoe20 in all the future planning, I miss the climate goals that Biden supports. The notion of getting to the target with efficient aircraft is overrated. 20% less fuel consumption is nice, a train would save >80% and not traveling at all would save 100%.
I don't know what will happen, but it is obvious that there will be restrictions.
Waiting on the monthly 737 Max disaster report--2+ years and the thing still isn't ready!
So you want to wait till next year to buy it? There are only two main players in the world... both backlogged to no end ... with a world Itching to travel up to coming out of a long pandemic. So I guess the prudent thing to do would be to wait until the runway for the next 10 years is absolutely clear.
@SMF_USR I am buying BA now - been adding for a year
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