It didn’t take long for analysts to chime in after aerospace company Boeing (NYSE:BA) announced plans to go with a guilty plea as the Justice Department bore down on it. But the analysts weren’t looking for bad news from the plea; quite the opposite, in fact. And amazingly, that’s what happened, as Boeing’s guilty plea sent shares up fractionally in Monday afternoon’s trading.
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George Ferguson, an analyst with Bloomberg Intelligence, advanced the unexpected—and so far, accurate—notion that Boeing falling on its sword and pleading guilty in the Justice Department’s fraud case would ultimately help the company. Ferguson says that, by pleading guilty, Boeing frees up that much more time and resources to tackle the various other issues facing it.
Now that Boeing has purchased Spirit AeroSystems, that only helps matters, as Boeing has more control over the production process. With its time and resources not being used to fight the government in a legal trial, the end result should be a positive one. Given how shares performed today, Ferguson might actually be on to something.
And Then Another Problem Hit
The bad news, however, is that with Boeing being Boeing, it was only a matter of time before something else went wrong. That something hit earlier today as reports from the Federal Aviation Administration (FAA) emerged, calling for inspections of 2,600 Boeing 737s over oxygen masks.
The reports noted that there were “multiple reports” of issues connected to the vital safety system, with oxygen generators “shifting out of position.” Without those generators up and running, that could cause issues in the event the masks are deployed against plane depressurization. The FAA called for airlines to “visually inspect” the generators to ensure they’re where they should be. Issues of “potentially defective parts” are also a concern.
Is Boeing Stock a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on BA stock based on 16 Buys, five Holds, and two Sells assigned in the past three months, as indicated by the graphic below. After a 12.71% loss in its share price over the past year, the average BA price target of $213.21 per share implies 14.78% upside potential.
