The fallout from Boeing’s (NYSE: BA) 737 Max groundings is now clear.
In the first half of the year, the aerospace company delivered 37% fewer planes in the wake of two related crashes in the past nine months. The discovery of a software issue in that model line set off a sweep of groundings from domestic and international airlines.
This week brought news that Flyadeal had canceled Boeing’s MAX units order. The Saudi company canceled its order of 50 of the MAX units and decided to buy Boeing’s Airbus variant instead.
Those issues have kept a cap on Boeing shares this year. The stock has added 9% this year, lagging the broader XLI industrials ETF’s 19% increase.
Now, one technician sees upside ahead.
"There is hope," said analyst Todd Gordon
"If we look at each of the declines over the last four years, they’re roughly 25-30%. We’re right at a 25% decline right now, holding onto that 200-period moving average."
Gordon says the stock just needs to remain above one key level for any rebound to have legs.
The stock tanked 25% in one of the more recent drawdowns from an October peak to a December bottom. From that trough to its March peak, the stock surged more than 50%.
Boeing trades at 19 times forward earnings, tumbling from its peak at a 22 times multiple earlier this year. The S&P 500 trades with a 17 times price-to-earnings ratio.
BA shares started Wednesday morning up $2.11 to $355.20
