Boeing (NYSE: BA) stock suffered mightily on earnings day last week -- rising at first on news that its first-quarter loss wasn't as bad as feared, but then closing the day down nearly 3% on news that Boeing is still burning cash at a frenetic pace. Investors eventually rallied to Boeing's cause, and the stock recovered some of its losses by the end of the week. That's the good news.
The bad news is that it may not last.
On Tuesday, Argus analyst John Eade announced he is removing his buy rating from Boeing stock, and downgrading the stock to hold. Eade declined to even guess at a price target for Boeing. He did say, however, that he thinks the stock is worth about $173 a share.
Is Boeing stock a buy in 2024?
And that's the other bad news. Boeing stock, you see, already costs $173. So what Eade basically said, in effect, is that there's no upside for Boeing stock in 2024.
Why does he think this? Well, for a long time (perhaps as far back as the beginnings of Boeing's 737 problems in 2019?) Eade's considered Boeing stock a "special situation" and a "turnaround opportunity." He still thinks this. But considering that the 737 program is accumulating new problems rather than fixing old ones, that Boeing's sales are down 8%, and that the company is losing money, burning cash, and even looking for a new CEO, Eade now admits any recovery for Boeing stock is probably "multiple quarters in the future."
He's probably right. Even optimistic analysts don't see Boeing earning significant profits (about $8 a share) until 2025. And valued on that 2025 forecast, Boeing stock costs only about 22 times earnings. Still, we're talking about earnings Boeing won't actually earn for two more years -- and maybe not even then. Meanwhile, valued on this year's projected $1.22 profit, Boeing stock at $173 costs more than 140 times earnings.
Maybe Boeing can turn itself around. I hope it does. For now, I'm not convinced that Boeing stock is worth what it costs.
Should you invest $1,000 in Boeing right now?
Before you buy stock in Boeing, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Boeing wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $544,015!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. TheStock Advisorservice has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of May 3, 2024
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
