Aerospace stock Boeing (BA) has been working on getting its new aircraft, the 737 MAX 10 and the 737 MAX 7, certified with the Federal Aviation Administration (FAA) for some time now. But the FAA, interestingly, does not believe that it is the reason certification has not already happened. Narrowing down the problem was good news for investors, meanwhile, and Boeing shares jumped nearly 1.5% in Thursday afternoon’s trading.
Claim 50% Off TipRanks Premium
- Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions
- Stay ahead of the market with the latest news and analysis and maximize your portfolio's potential
Boeing expects to reach certification sometime this year, reports note. With over 1,200 orders in for the MAX 10 already, there is every reason to get the certification through as quickly as possible. But the FAA, for its part, does not believe it is the problem.
As administrator Bryan Bedford noted, the FAA has already delivered quite a bit of help to Boeing, but Boeing still has to do the heavy lifting itself. Bedford noted, “We can only help get them there, but they have got to do the work, and they’re doing the work. I don’t think FAA is the roadblock on 7 and the -10 certification.” With the MAX 10 now in the second phase of flight testing, it does seem that, indeed, Boeing is doing the work.
Pushing for the Finish Line
Reports suggest that one major problem for Boeing—or for anyone else involved in aircraft manufacture—is a shortage of aircraft mechanics in general. The FAA has certainly been helpful to Boeing; fines for Boeing’s multiple safety violations were light, coming in at just $3.1 million.
But with the average age of an aircraft mechanic currently about 54, it is clear that Boeing will be facing a serious shortage in the not-too-distant future. Without a supply of young aircraft mechanics stepping in to replace the soon-to-be-retired engineers, the end result is likely aircraft that have been purchased, but orders that will remain unfilled for years. Boeing has been working to fill in these gaps with a summer program geared toward high school and postsecondary students, but the numbers are still a bit light.
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 14 Buys, two Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 40.1% rally in its share price over the past year, the average BA price target of $258.85 per share implies 2.15% upside potential.
