Boeing’s (NYSE:BA) selling pressure is so negative that the stock will re-test the $320 bottom set last week and in mid-August. The delay in resuming MAX 737 production is a big headwind.
For income investors, the 2.5% dividend yield is low, too. Other Dow components offer a better yield and lower risks. Even so, Boeing is a compelling bet at below $300 a share.
Boeing confirmed on Dec. 16 that it will delay MAX 737 production in January. It said the delay is due to certification moving into 2020. This reduced production output will enable the company to build its storage. It now has 400 airplanes in storage.
For patient investors, the delay is a setback. Profits and revenue will continue to get penalized over the delay. Still, the bad news drove down BA stock and might send the stock lower still. At below $300, the stock’s forward P/E will fall to 14.6 times, assuming an EPS of $20.61.
Boeing’s failure to dock the spacecraft Starliner is another setback and a reason for BA stock to sell-off. Boeing still learnt plenty from the mission’s failure. So, the next mission should find success after the company figures out what went wrong.
And that news, when it comes, will be another positive factor lifting the stock.
