The merger between aerospace stock Boeing (BA) and Spirit AeroSystems (SPR) is proceeding apace, though a recent court decision has put a bit of a speed bump in the way. The courts are requiring Boeing to divest some elements of Spirit before the merger can go through. Though these are not exactly onerous requirements, they were still enough to concern shareholders. Those shareholders sent shares sliding nearly 2.5% in Wednesday afternoon’s trading.
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Boeing hoped to close the merger by the end of 2025, but the word from the Federal Trade Commission (FTC) is likely to complicate things sufficiently to make that closure date less certain and more aspirational. The big problem that the FTC is out to address is that parts of Spirit actually make parts for Boeing’s chief competitor, Airbus (EADSY).
Thus, the FTC wants Boeing out of that business, for reasons that are actually pretty clear. Boeing and Airbus have actually been in negotiations to shuffle those parts around as it is, so how much problem this will be is unclear. However, the FTC also wants Spirit to continue to supply parts for Boeing competitors who are trying to land military contracts. This keeps Boeing from using Spirit to keep competition out of the military procurement process.
Hangover Cure
As for Boeing’s “hangover” from the 737 MAX crises of 2019, the good news is that seems to be a factor no longer. This word comes from no less than Dan Elwell, the former administrator of the Federal Aviation Administration (FAA), who rode herd on the FAA in the years after the problems started. While at the AeroClub of Washington’s monthly luncheon, Elwell noted, “The FAA still is sort of feeling and nursing sort of the wounds. There was a certain amount of MAX PTSD after the pressures that hung around for a while….”
While there are still issues—Boeing does have a production cap still in place, even if it was recently expanded—it is also clear that Boeing’s efforts have not been for naught. This suggests that the worst of the problem has passed, and Boeing is bouncing back. So too is the FAA, Elwell noted.
Is Boeing a Good Stock to Buy Right Now?
Turning to Wall Street, analysts have a Strong Buy consensus rating on BA stock based on 13 Buys, two Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 29.76% rally in its share price over the past year, the average BA price target of $249.07 per share implies 23.98% upside potential.
