Boeing Stock Seen as a 'Dog of the Dow' for 2025. That's Bullish. -- Barrons.com

Dow Jones12-19

Al Root

Boeing stock has started to pick up some steam, and it still has support on Wall Street. One analyst recently called the aerospace contractor a "Dog of the Dow." That's a positive.

Thursday, TD Cowen transferred coverage of Boeing stock among its analysts. Now Gautam Khanna covers shares, taking over for Cai von Rumohr.

Khanna rates Boeing stock at Buy -- like von Rumohr -- and the price target is now $200, up $10 from $190.

Khanna is feeling better about Boeing, writing that it is in a Dog of the Dow setup.

The traditional Dogs of the Dow strategy involves buying the 10 stocks in the Dow Jones Industrial Average with the highest dividend yields. Boeing doesn't pay a dividend. It stopped paying one in 2020 amid the pandemic and problems with its 737 MAX jet.

In this instance, Boeing stock is just a dog. Coming into Wednesday trading, Boeing stock was down about 34% year to date. It's the worst performer currently in the Dow. (Don't forget Intel was replaced by Nvidia earlier this year.)

The reasons for Boeing's struggles have been well documented. Design and production problems with the 737 MAX, weakening profitability in its defense business, management turnover, and labor unrest.

Still, things can get better. "Investor appetite for aero stocks is high, " added Khanna. "The slowing aero aftermarket sets up for a rotation into the largest U.S. original equipment [maker] stock (Boeing), should [business] execution improve, as we think it will in calendar year 2025 [and beyond]."

Slow production from both Boeing and Airbus has helped sellers of aftermarket aircraft parts rally. FTAI Aviation stock, for instance, which services aircraft engines, was up about 173% year to date, coming into Thursday trading.

Boeing stock was up 1.6% in premarket trading at $175.35 while S&P 500 and Dow Jones Industrial Average futures were up about 0.8% and 0.7%, respectively.

That's up about $20 a share from levels just before Boeing settled its roughly seven-week labor strike. Things have started to turn around -- a little. Shares started the year at about $260. The record high for shares -- reached in early 2019 -- was about $440.

"Great comeback effort so far," says CappThesis founder and market technician Frank Cappelleri. "The bottom line is that if this bounce is going to turn into anything more substantial, Boeing must stay above its 200-day moving average."

That's something for investors to watch. Boeing shares' 200-day moving average is about $173.

Cappelleri isn't making a fundamental call on Boeing stock. He studies charts and market history to help detect turns in investor sentiment.

One might be coming. For investors, that would be welcome after an incredibly difficult few years.

Overall, 55% of analysts covering Boeing stock have Buy ratings, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst price target for Boeing stock is about $183.

Write to Al Root at allen.root@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

 

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December 19, 2024 09:01 ET (14:01 GMT)

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