Shares of Boeing are down 2% since the beginning of the year
Disappointing Q4 metrics and Russia’s invasion of Ukraine have put pressure on stock
Long-term investors could consider buying the dip, especially if it declines toward $190.
At the end of January, shares of the aerospace and defense giant Boeing (NYSE: BA ) slumped to a 52-week low of $183.77. But since then, the stock has rallied about 8%, and is down only 2% year-to-date. Boeing Weekly Chart. By comparison, the Dow Jones US Select Aerospace & Defense Index is up 11.6% in 2022. On the other hand, Boeing’s main competitor Lockheed Martin (NYSE: LMT ) is enjoying solid returns of more than 25% so far in 2022.
The past 12 months have not been good for BA shareholders. On Mar. 15, 2021, the stock went over $278 to hit a 52-week high. But since then, shares are down around 28%. BA stock’s 52-week range has been $183.77-$278.57, while the market capitalization stands at $116.0 billion.
Boeing released Q4 financials Jan. 26. Overall, the results were a big miss. However, the positive cash flow figure of $494 million was also a surprise for analysts.
Total revenue came in at $14.79 billion, down 3% year-over-year. In the commercial airplane division, revenues remained flat at $4.75 billion. But the defense, space and security division suffered a 14% decline. Meanwhile, revenues in the global services division enjoyed a 15% increase.
Adjusted loss per share was $7.69. A year ago, the comparable figure had been $15.25.
On the results, CEO David Calhoun, said: “ 2021 was a rebuilding year for us… As the commercial market recovery gained traction, we also generated robust commercial orders, including record freighter sales. Demonstrating progress in our overall recovery, we also returned to generating positive cash flow in the fourth quarter.” In 2022, management expects to see higher 787 and 737 deliveries in the commercial division, and has solid growth expectations for the global services division. However, revenues for the defense, space and security should remain flat.
Investors were not pleased with the results. Prior to the release of the fourth quarter results, BA stock was at $206. Now, it is shy of $198. Meanwhile, Russia’s invasion of Ukraine has also added to their volatility. What To Expect From Boeing Stock
Among 25 analysts polled via Investing.com , BA stock has an “outperform” rating. Wall Street also has a 12-month median price target of $258.45 for the stock, implying an increase of more than 30% from current levels. The 12-month price range currently stands between $180 and $307. Consensus Estimates of Analysts Polled By Investing.com. Source: Investing.com
However, according to a number of valuation models presented on InvestingPro , like those that might consider P/E or P/S multiples or terminal values, the average fair value for Boeing stock stands at $191.82. BA Fair Value Source: InvestingPro
Put another way, fundamental valuations suggest shares should fall by 2.8%.
In comparison, LMT stock’s fair value stands at almost $550, implying a return of more than 22%.
Our expectation is for Boeing stock to trade in a wide range and build a base between $185 and $205 in the coming weeks. Afterwards, a new up leg in BA shares could possibly begin. Adding BA Stock To Portfolios
Boeing bulls who believe the decline in the stock is likely to come to an end could consider investing now. Their target price would be analyst forecasted price of $258.45.
Alternatively, investors could consider buying an exchange-traded fund (ETF) that has BA stock as a holding. Examples include:
Although investors might want to buy BA stock for their long-term portfolios, they could also be nervous about further declines in the coming weeks. Therefore, some might prefer to put together a “poor man’s covered call” on the stock instead.
So, today, we introduce a diagonal debit spread on Boeing by using LEAPS options, where both the profit potential and the risk are limited. Investors who are new to the strategy might want to revisit our previous articles on LEAPS options first before reading further.Most option strategies are not suitable for all retail investors. Therefore, the following discussion on BA stock is offered for educational purposes and not as an actual strategy to be followed by the average retail investor. Diagonal Debit Spread On BA Stock Price at time of writing: $197.40A trader first buys a longer term call with a lower strike price. At the same time, the trader sells a shorter term call with a higher strike price, creating a long diagonal spread.Thus, the […]
source Boeing: 3 Strategies To Take Advantage Of Share Price Weakness
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