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Boeing Stock Rises as Wells Fargo Upgrades to Overweight

Boeing should benefit from the China737 MAX recertification and other factors, Wells Fargo says, upgrading the Chicago aerospace giant's stock.
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Boeing  (BA) - Get Free Report stock was flying higher on Wednesday after a Wells Fargo analyst upgraded the aerospace giant to overweight from equal weight and boosted his stock price target to $272 from $224.

Shares of the Chicago company were up 0.4% to $226.76. The stock on Wednesday has traded up as much as 2.4% at $231.32.

Analyst Matthew Akers said in a research note that he saw a positive risk/reward balance with Boeing's stock lagging the S&P 500 Index by 30% since its March high, according to the Fly.

Boeing should benefit from the China 737 Max recertification, resumption of 787 deliveries, higher fuel costs driving more aircraft retirements, and easing international travel restrictions, Akers said.

Each of these is a "matter of when rather than if," the analyst said. 

Akers said he saw limited share downside, noting that Boeing has derisked 2022 delivery expectations and is less susceptible to supply-chain disruption given its large inventory of completed aircraft.

Reuters reported on Monday that the China's Civil Aviation Administration CAAC was pleased with changes made to the 737 Max's aviation-control system software and display, following deadly crashes in Indonesia and Ethiopia. The agency has invited domestic carriers to comment before the end of the month.

Boeing reached an agreement with the families of the victims of the March 2019 Ethiopia crash that claimed 157 lives, according to court documents filed in federal court in Chicago.

The company said that its software was to blame for the destruction of Ethiopian Airlines Flight 302, which lost control shortly after takeoff.

Separately, Boeing said Tuesday that startup Indian airline Akasa Air, a brand of SNV Aviation, ordered 72 737 Max Jets “valued at nearly $9 billion at list prices.”

Akasa “plans to offer commercial flights starting in the summer of 2022 and use its new fleet of 737s to meet the growing demand across India,” the companies said.

In addition, Qatar Airways is considering an imminent purchase of a freighter aircraft and is looking at an "attractive proposition from Boeing," Chief Executive Akbar Al Baker said Wednesday, according to Reuters.

Last month, Boeing posted a wider-than-expected third quarter loss, as well as softer revenues, as the plane producer cautioned that charges linked to its delayed 787 Dreamliner could reach $1 billion.