Boeing Stock Forecast: September Setback in 737 Max Deliveries

Boeing (BA:NYE) faced a drop in its 737 Max deliveries in September, hitting a low point with only 15 units shipped. Figures mark the lowest since May 2021. Alongside these 737 Max deliveries, the company also achieved successful shipments of 10 wide-body 787s and two 777 jets within the same month. Despite this mixed performance, Boeing’s overall commercial jet deliveries took a 6.3% year-over-year dip, settling at 105 units for the entire September quarter. The primary cause of this decline lies in a fuselage issue that recently emerged, with key components supplied by Spirit AeroSystems (SPR:NYE). This article will highlight the impact of shipment delays on Boeing stock forecast.

Production Challenges and Supplier Issues:

In September, Boeing manufactured 22 of its 737 Max aircraft, significantly lower than the projected production rate of 38 jets monthly. The primary issue stemmed from inaccurately drilled fastener holes on the aft pressure bulkhead of certain planes, which were sourced from Spirit AeroSystems, known for obtaining fuselage components from multiple vendors. Boeing had already cautioned about the likelihood of not meeting delivery expectations for the September quarter.

737 Production Rate Cut in Half:

The 737 Max planes, each with an approximate price tag of $100 million, saw their production rates cut in half due to the fuselage issue. Despite this setback, Boeing remains optimistic, suggesting it can achieve the lower end of its 2023 delivery target, ranging from 400 to 450 jets. Boeing successfully delivered 286 Max planes up until the end of September.

Impact on Airlines and Resolution Efforts:

The delayed deliveries of Boeing’s 737 Max are affecting the company and simultaneously presenting challenges for its customers, particularly large airlines aiming to meet the increasing travel demand, especially as the holiday season approaches. Rectifying the mis-drilled fastener holes necessitates inspection and fixes, which, although non-hazardous to flight safety, consume valuable time. Boeing remains committed to ensuring a thorough resolution.

New Horizons and Growth Prospects:

This year, Boeing has been dealing with a series of obstacles that hinder its jet deliveries. To tackle these challenges and boost deliveries, the company aims to elevate Max jet production to an unprecedented 57 units per month by July 2025. Meanwhile, the 787 Dreamliner jets continue to garner orders. Recently, Boeing secured an order for 18 787-10 widebody jets from Air Canada, a step in the direction of modernizing its aircraft fleet. Boeing also has its sights set on establishing its largest manufacturing facility outside the United States, which will be located in India.

Financial Expert Insights:

Financial experts are taking a positive stance on Boeing stock, despite the recent supply chain disruptions.

UBS, a reputable research firm, initiated coverage of Boeing with a buy rating with a price target of $275, indicating a potential upside of 42.1%. In light of the current strong demand for air travel, UBS believes that BA’s stock price already reflects the supply chain challenges.

Similarly, Ronald Epstein, an analyst at Bank of America Securities, maintains a buy rating on BA stock with a price target of $300, suggesting a potential upside of 55%.

Boeing Stock Forecast:

The average target price is USD 254.41 for October 2024, based on a Boeing stock forecast from 15 analysts. With a prevailing Strong Buy consensus among analysts, the stock price was USD 193.53 at the last closing.

Notably, Boeing’s stock has experienced a 2.44% increase over the past week, a decrease of 8.40% over the last month, and a notable surge of 46.72% over the past year.

Conclusion:

Boeing’s September setback in 737 Max deliveries, while influenced by supply chain complications, is being addressed with determination and forward-looking strategies. As the company continues to navigate challenges, financial experts remain optimistic about its stock’s potential, reflecting the enduring strength of Boeing’s position in the aerospace industry. The blend of demand resurgence and ambitious production targets may pave the way for brighter days ahead for Boeing and its investors.

Maryam Nasir