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Boeing Downgraded to Sell by Redburn After Rally

Boeing's recent upturn has gotten a little ahead of itself, given that the company still faces obstacles, says Redburn.
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Redburn analyst Jeremy Bragg downgraded shares of Boeing  (BA) - Get Boeing Company Report to sell from neutral, with a price target of $180 a share.

The stock’s recent rally has gotten a little ahead of itself, given that the company still faces obstacles, the analyst said. Boeing enthusiasts should “curb their enthusiasm.” 

Boeing recently traded at $224.98, down 0.39%. It has jumped 35% over the last three months amid hopes that distribution of Covid-19 vaccines will send reluctant travelers back in the air.

The stock’s move didn’t come out of thin air, Bragg said. 

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“The recertification of the MAX and progress with a vaccine are undoubtedly good news,” he wrote. But Boeing still has to worry about demand, competitive positioning, free cash flow and debt, Bragg said. “Boeing’s share price is no longer supported by its fundamentals.”

Just Wednesday, Southwest Airlines  (LUV) - Get Southwest Airlines Co. Report announced a reduction in the number of Boeing 737 MAX planes it will receive through next year to 35 from the 48 it planned in April. The 737 MAX was grounded in March 2019, following two deadly accidents, until just last month.

Earlier this week, J.P. Morgan analyst Seth Seifman raised his share-price target on the airplane maker to $265 from $190, keeping his rating at neutral.

Transport Canada, meanwhile, announced Thursday it has validated the design changes to the Boeing 737 MAX aircraft recently certified by the U.S. Federal Aviation Administration. 

“Validation … means that these modifications can now be incorporated on Canadian registered aircraft,” Transport Canada said in a statement.