Boeing (BA) $208
Boeing (BA) has been a chronic underperformer – its last 10-year total return is just 63% – that’s 5% a year, despite being a duopoly, quality issues have constantly dogged its performance.
That said – Boeing will likely recover about 15-20% from this price. It has done that several times in the past and is currently working with regulators fixing its quality problems with the Boeing 737 Max 9, which suffered the explosive decompression accident in January and has been grounded till quality issues are sorted out.
Besides, it’s a duopoly with $125Bn worth of order inflows – demand is solid, customers have nowhere else to go, and they have a lot of deliveries planned for 2024.
However, this is at best, a mediocre cyclical long-term investment, you have to constantly look over your shoulder for quality and delivery issues. Even in 2023, they fell 10% short of delivery performance, due to quality issues at Spirit AeroSystems, one of their key suppliers.
Boeing has not given guidance for 2024 – they should not, as an investor I would prefer that they focus on solving their safety problems first instead of rushing through. And as Dhierin Bechai one of the better Boeing and Aerospace analysts at Seeking Alpha, said
“It is widely considered that the problems at Boeing originate from a financially focused mindset where the focus is on financial numbers rather than engineering and manufacturing strength.”