JPMorgan restores 'buy' call on Boeing after more than a year

[BENGALURU] JPMorgan analysts have turned bullish on Boeing shares on the likelihood that China will soon allow the US planemaker's 737 Max jet to return to its skies following a global grounding.

The brokerage gave an "outperform" rating to the stock on Thursday (Nov 18), saying the US planemaker can ramp up global deliveries of the Max jet to 52 per month in 2024, a rate which could eliminate Boeing's inventory of excess 737s by 2025.

It had downgraded the stock by a notch in March 2020, just when the pandemic had started to extract a huge toll on the airline industry. Boeing's 737 Max had already been grounded for a year by then, following 2 deadly air crashes.

Earlier this week, China's aviation regulator agreed that design changes Boeing proposed for its 737 Max plane could resolve safety problems.

"Max certification is just one element of Boeing's China exposure, with another being future orders," said JPMorgan's Seth Seifman, a 4-star rated analyst by Refinitiv for his estimate accuracy.

Seifman estimates 445 deliveries of 737 Max aircrafts in 2022, or 37 planes per month, compared with an average delivery of about 20 planes each in the last four months.

The analyst also raised his price target on Boeing to US$275 from US$260, indicating a 21.3 per cent upside to the stock's Wednesday (Nov 17) close.

"Boeing's position at the centre of global air travel offers confidence that it will recover financially over time and we believe risk-reward now skews favourably," Seifman said.

REUTERS