Boeing Is Now a Conviction Buy, Says Goldman Sachs

Despite continued woes, the aerospace giant should do well in a post-virus world, when plane deliveries resume and the 737 Max is flying, the bank contends.

Sure, troubles may continue to plague aerospace company Boeing, which was already dealing with a grounded line of 737 Max airplanes before the pandemic halted air travel, but that hasn’t stopped Goldman Sachs from putting the stock on its conviction buy list.

The investment banker added Boeing and defense contractor Raytheon’s stocks to its list of best investment ideas, according to an analyst note this week. Researchers took defense stocks Lockheed Martin and L3Harris Technologies off, though they clarified that both remain exceptionally positioned in their market sector.

But the investment bank saw more upside in Boeing. “We believe it is a particularly unique time in history to invest in aerospace stocks,” analysts wrote.

Boeing stock has risen from its recent lows, analysts noted, though it is still lagging broader indexes such as the S&P 500. The stock price jumped to $230 in June, up from $95 in May. It’s since hovered in the $160 to $180 range as investors continue to watch recovery in air travel. Year to date, the stock is down 53%.

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That provides an “attractive entry point” for investors who may want to buy into the stock as economies reopen and air travel recovers, Goldman said. Analysts are eyeing recent news that the 737 Max airline will return to service after clearing recent safety checks. It was grounded in March 2019 after two crashes less than five months apart killed nearly 350 passengers.

Analysts also think that while the market is currently oversupplied, the balance will right itself by 2024 as global air travel recovers and airlines replace accelerated retirements.

“Both of those have the potential to see more meaningful progress in the next few months compared to the last few months,” they wrote.

Still, investors were not impressed. Since Sunday, Boeing stock price is down almost 10% to about $147 per share in Thursday morning trading.