Boeing stock price has rebounded in the past few months as the company has received major orders and largely avoided the tariff backlash that many analysts were expecting. BA was trading at $235, close to its highest point since January and 81% above the lowest level this year.
Boeing order book is growing
Boeing stock price has rebounded this year as it has largely remained out of trouble and its turnaround has continued. It has resumed boosting its 737-MAX planes, and airlines have continued to place large orders, a sign o growing confidence.
The most recent large order came this week when Korean Air placed a purchase bid for 103 jets. Most of these orders are 737-10s, followed by 787-10s, and 777-9s.
Boeing also received an order from Cathay Pacific and Gulf Air. Most importantly, media reports indicate that Chinese airlines are considering a large order of 500 planes, to be divided between Boeing and Airbus.
Boeing’s smaller backlog than Airbus could play to its advantage because it means faster delivery times. Besides, despite some major accidents, Boeing continues to manufacture safe aircraft.
BA published strong results
The most recent results showed that Boeing was making progress in its operations. It is now making 38 737 planes per month, a trend that will continue in the coming months.
Its revenue rose by 35% to $22 billion in the second quarter, bringing the first half figures to $42 billio.
Boeing reported a net loss of $642 million during the quarter. While this was a big number, it was a big improvement to the $1.4 billion it lost in the same period last year.
Boeing’s revenue jumped because of its strong delivery numbers. Its deliveries rose to 150, while the defense, space, and security revenue soared by 10% to $6.6 billion.
Boeing ended the last quarter with a backlog of 5,900 planes worth over $522 billion and a defense, space, and security of $74 billion. Its backlog in the defense segment is higher than that of several pure-play defense contractors.
There are other reasons to consider buying Boeing. First, the company has not made any major negative headlines in the past few months. The only major issue was the Air India crash, which involved a Boeing plane. On the positive side, investigators largely exonerated the company.
Boeing stock will likely continue thriving as long as it stays out of trouble, allowing the management to continue executing the turnaround.
Second, Boeing has improved its balance sheet in the past few years. It ended the last quarter with $23 billion in cash and marketable securities, down from $23.7 billion in Q1, while its consolidated debt reduced to $53.3 billion.
Third, there is a risk that the US will block sales of aircraft manufacturing parts to China, further hindering progress of its domestic manufacturing capacity.
Finally, the current BA stock price of $234 is lower than the average analyst estimates of $247. That is a sign that investors expect it to continue rising eventually.
Boeing stock price technical analysis
The daily chart shows that the BA stock price has been in a strong uptrend in the past few weeks, moving from a low of $129 in April to the current $234. It recently crossed the important resistance level at $187, its highest swing in February.
The stock has remained constantly above the 50-day moving, a sign that bulls are in control. It is also forming the highly common bullish flag pattern.
Therefore, the stock will continue rising as bulls target the next important resistance level at $250, followed by the psychological level at $300.
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