Boeing (BA) - Get Boeing Company Report stock gained on Thursday, helping lift the broader Dow Jones Industrial Average, after J.P. Morgan analysts restored their bullish outlook on expectations that China will soon allow the planemaker's 737 MAX jet to return to its skies.
Boeing shares were up 1.53% at $230.09 in premarket trading after J.P. Morgan gave an outperform rating on the stock on Thursday, saying the U.S. planemaker can ramp up global deliveries of the MAX jet to 52 per month in 2024, a rate which could eliminate Boeing's inventory of excess 737s by 2025.
"MAX certification is just one element of Boeing's China exposure, with another being future orders," J.P. Morgan analyst Seth Seifman said in a research note to clients, adding that he estimates 445 deliveries of 737 MAX aircrafts in 2022, or 37 planes per month, compared with an average delivery of about 20 planes each in the last four months.
Seifman also raised his price target on Boeing to $275 from $260, indicating a 21.3% upside to Wednesday’s close. The brokerage had downgraded the stock in March 2020 as the pandemic began to ground the airline industry, though the 737 MAX had already been grounded for more than a year at the time.
"Boeing's position at the center of global air travel offers confidence that it will recover financially over time and we believe risk-reward now skews favorably," Seifman said.
Reuters reported earlier this week that the China's Civil Aviation Administration, or CAAC, is happy with changes made to the 737 MAX's aviation control system software and display, following deadly crashes in Indonesia and Ethiopia, and has invited domestic carriers to comment before the end of the month.
Boeing China President Sherry Carbary said in September she hoped the CAAC, which grounded the jet in 2019, would reverse that decision by the end of the year.