Calling Boeing’s (BA) Starliner program a debacle at this point is almost insulting to actual debacles because this is the worst of a debacle, plus a clown show for how avoidable it all was. The latest reports say that the Starliner program’s cost overruns are now a whopping $1.6 billion, and that news sent shares of the aerospace company careening downward over 6% in Thursday afternoon’s trading.
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The latest reports have Boeing dropping more cash on Starliner, which isn’t surprising given the latest reports that they’re still trying to figure out what went wrong so the whole thing doesn’t end catastrophically when the astronauts return sometime this month.
This is after Boeing landed a $4.2 billion contract back in 2014 to step up the development of the Starliner platform. Despite that hefty influx of cash, Boeing keeps losing money on the entire deal as it recently added $125 million to all the previous sunk costs. And since Starliner was constructed on a “fixed-price” basis, that means that all those losses are Boeing’s.
Court Trouble and a Call to Move
Sadly, that’s not the end of Boeing’s troubles, but rather, the start. Reports note that Boeing is still facing backlash over its plea deal with the government. The families of the passengers killed in the 737 MAX crashes are speaking out and calling on judges to reject the plea deal that Boeing and the Department of Justice cobbled together. The families are calling for stiffer penalties for Boeing.
Meanwhile, with Boeing’s new CEO in place, there are growing calls for Boeing to depart Virginia and instead head for Washington. Senate Appropriations Committee chair Patty Murray called on Boeing to come back to its original home. Murray noted that she’s been following Boeing very closely, and looks forward to ensuring Boeing is kept accountable, with high standards accordingly.
Is Boeing Stock a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on BA stock based on 15 Buys, four Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 22.85% loss in its share price over the past year, the average BA price target of $218.74 per share implies 23.14% upside potential.
