The Boeing Company (NYSE:BA) suffered three years of turbulence that began with the grounding of the 737 Max. The company was then hit by the COVID-19 pandemic restrictions. The challenges faced by Boeing seem to ease off as the 737 Max takes flight. The rates of global travel have started to rise.
The ongoing war in Ukraine revived orders for warplanes. Additionally, orders for new planes have started flowing to the company. The dark days may be over, and Boeing looks forward to better days ahead. However, the financial damage of the past three years is still a factor to consider.
Boeing went into debt, settling the liabilities and costs coming from the accidents and grounding of the 737 Max. It suspended dividend payouts and the share buyback plan stalled. As debt repayments take precedence in the company’s plan, Boeing is unlikely to return to profitability immediately.
Besides, Boeing faces the systematic risk of medium-term transactions. We project that Boeing will only start realizing the benefits of the current strategic shifts in the medium term of 2 to 3 years.
Boeing trapped below $200, to breakaway after hitting $155
Source – TradingView
The market valuation of Boeing has been trapped below the MACD oscillator depicting a bearish pattern. However, the divergence between margin and the signal continued narrowing down.
For some time, the share price sent mixed reactions to the market. The stock traded at $175.52 when this analysis was presented, looking likely to decline a little further to find support at $155. The stock will then break through the MACD signal and set the pace for an upward trend. Once this happens, BA will revert to its long-term bullish patterns.
Summary
Boeing is a stock to watch for the patient investor. As the company continues to receive orders, the financial position will improve. We think that investors should wait to catch the company at $155.
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