Call it a mixed bag of news today for Boeing (NYSE:BA), as the aircraft manufacturer struggles to regain its footing from a series of disasters in recent memory. The good news was word about Boeing production, which is on the rise. Investors, though, are still skeptical, and shares are down fractionally in Tuesday afternoon’s trading.
Boeing managed to roll out more commercial planes in June than it has at any other point this year. It brought out a total of 44 planes in June, including 35 737 MAX models, three 787 Dreamliners, and a few other types.
While the Federal Aviation Administration (FAA) has capped Boeing’s production at 38 737 MAX planes per month, Boeing is still working under the total, which suggests this pace is at least sustainable. However, given that its primary competitor Airbus (OTHEROTC:EADSY) put up 67 planes for June, it’s clear Boeing will have a lot of catching up to do.
The Downside of a Guilty Plea
Meanwhile, there’s a bigger downside to the guilty plea that Boeing recently entered amid allegations of fraud. That downside? The potential loss of government contracts. That guilty plea actually put said contracts at risk, and now, Boeing is trying to get a waiver out of the Pentagon in order to continue being a military supplier.
With Boeing’s defense work representing about a third of its income, its commercial products increasingly disconcerting, and its space mission still…um…not yet ready to return home, it needs those contracts now more than ever. However, it can be done; Siemens AG (OTHEROTC:SIEGY) landed a similar waiver in 2008 after pleading guilty to anti-corruption law violations.
Is Boeing Stock a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on BA stock based on 16 Buys, five Holds, and two Sells assigned in the past three months, as indicated by the graphic below. After a 13.72% loss in its share price over the past year, the average BA price target of $213.21 per share implies 15.91% upside potential.
