Is Boeing Ready to Soar Again in 2022?

Investors in Boeing Co. (BA, Financial) have endured a number of serious setbacks in recent years. I have been chronicling Boeing’s trials and travails since 2019, from the agonizing saga of the 737 MAX grounding and subsequent grinding recertification process, to the embarrassing errors and delays that have plagued the Starliner spacecraft,

With 2021 coming to an end, investors have started to look to the future. According to some top Wall Street analysts, 2022 may offer Boeing the opportunity to take flight once more.

Wells Fargo: Derisked and ready to rise

Boeing has slowly worked to extricate itself from a number of major, and largely self-inflicted, crises over the past couple years. According to a research note published last month by Wells Fargo (WFC, Financial) analyst Matthew Akers, the pain should soon come to an end, as TheStreet reported on Nov. 17:

“Boeing should benefit from the China 737 Max recertification, resumption of 787 deliveries, higher fuel costs driving more aircraft retirements, and easing international travel restrictions, Akers said. Each of these is a ‘matter of when rather than if,’ the analyst said. Akers said he saw limited share downside, noting that Boeing has derisked 2022 delivery expectations and is less susceptible to supply-chain disruption given its large inventory of completed aircraft.”

There may be ample justification for Akers optimism, in my opinion, especially on the China front. Market confidence definitely got a boost on Nov. 15, when China’s Civil Aviation Administration issued a positive review of the design changes made to the 737 MAX since its grounding in May 2019.

While Boeing has lagged the broader market in 2021 by a significant margin, a potential jolt of fresh Chinese demand could help jumpstart the stock in 2022. Hence, Akers’ decision to move Boeing to an overweight rating has some reasonable justification.

JPMorgan: Positive catalysts inbound

Well Fargo is far from the only Wall Street shop to take a bullish turn on Boeing. JPMorgan Chase & Co. (JPM, Financial) also upgraded Boeing from neutral to overweight heading into 2022. In a November research update, JPMorgan analyst Seth Seifman identified a number of positive catalysts he believes will buoy Boeing’s stock in the year ahead, as Yahoo Finance reported on Nov. 18:

“Seifman says the shares have a ‘fairly defined catalyst path,’ and the first, China's MAX certification, ‘is now in view.’ Further, Boeing's position at the center of global air travel ‘offers confidence that it will recover financially over time, and we believe risk-reward now skews favorably,’ says the analyst.”

While he largely concurred with his Wells Fargo counterpart in terms of reasons for optimism, Seifman’s upgrade was not without qualification. The analyst admitted that his upgrade might be a bit early, since turning around a massive organization like Boeing cannot be done overnight. However, Seifman appears confident in the overall direction, if not the timing, of Boeing’s turnaround, saying he was “prepared for a slog.”

My take

Since May 2019, I have struggled to find many positive things to say about Boeing. The company’s organizational culture failed to prevent numerous self-inflicted wounds that have proven both costly and embarrassing. However, there are at last some signs that the aerospace giant is finally getting back on track.

Much will hinge on Boeing’s ability to deliver in 2022. I will be watching with great interest as the story plays out in the coming months.