So I guess that aerospace stock Boeing’s (BA) frantic attempts at self-improvement have not cut much ice with the Federal Aviation Administration (FAA) at all, because new reports out from Reuters say that the oversight of the company will continue “indefinitely.” About the only positive development out of that is that investors are used to reversals now, and shares only dropped fractionally to find that the government will basically be meddling forever now.
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With the oversight also comes a production cap that limits Boeing to just 38 737 Max planes per month, and, despite the fact that the FAA has conducted what it calls “…an unprecedented number of unannounced audits,” along with “…monthly status reviews with Boeing executives to monitor progress,” that still is not enough for the FAA to do anything less than weld the training wheels in place pretty much forever.
Proving little help here was what Mike Whitaker with the FAA described as, apparently, what needs to be done to get the government off Boeing’s back: “…a fundamental cultural shift at Boeing that’s oriented around safety and quality above profits.” Actually achieving this marvel of vagueness will required “…sustained effort and commitment from Boeing and unwavering scrutiny on our part.” Which actually means next to nothing; Whitaker will be out of that slot January 20 when the Trump administration takes over, and incoming replacement Sean Duffy is basically looking for “…safe planes coming out of Boeing,” which may not require largely permanent government oversight.
“We’re Turning Things Around!” Says Boeing
The problem, of course, is that things keep going wrong with Boeing planes, as we just saw over in South Korea at Muan International Airport. That was where the single-worst air disaster in South Korea’s history just hit with a Boeing 737-800 aircraft performing a belly landing off the runway and into a concrete bunker, or rather, fence.
But, to give Boeing some credit here, a recent presentation titled “Elevating Safety & Quality Culture” reveals that Boeing has “…addressed over 70% of action items in commercial airplanes production based on employee feedback,” according to NBC News. That cannot be taken away from Boeing, even if it proves almost as vague as Whitaker’s own remarks.
Is Boeing a Good Stock to Buy Right Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on BA stock based on 14 Buys, seven Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 29.99% loss in its share price over the past year, the average BA price target of $194.21 per share implies 13.64% upside potential.
