Aerospace stock Boeing (BA) has had problem getting product out the door for some time now, and perhaps one of its highest-profile failures was the two new Air Force One jets the government wanted to purchase. New reports emerged suggesting what was wrong, and the news proved little help, sending shares careening down around 3% in Friday afternoon’s trading.
The obvious question here is, what happened? What is keeping Boeing from producing two aircraft—and really just modifying two aircraft that were already built—in order to meet a contract to carry around the leader of the free world? Reports suggest that the issue is actually bigger than anyone might have thought.
There are, according to word from the Air Force, who would understand probably better than anyone else, “….about a dozen technical obstacles…” involved in the matter. There are flaws in several windows, including passenger and cockpit windows, there are cracks in the fuselage, and even issues of noise and certification involved. All of these must be addressed, and they are taking a lot more time and cash to fix than anyone expected.
A New Competition
But Boeing’s problems do not stop there. Turns out it is in competition with another kind-of rival, Northrup Grumman (NOC), to see who will build the next F/A-XX carrier fighter, reports note. The new plane will be the Navy’s sixth-generation plane, taking over for the EA-18G Growler and the F/A-18 Super Hornet, reports note.
The fight got a little easier for both, as Lockheed Martin (LMT) found itself excluded from the competition, leaving only Boeing and Northrup Grumman in the running. Reports suggest that Lockheed may have lost ground due to “…differences in Navy and Air Force requirements….” While certainly, Boeing has put a lot into fighter generation, Northrup Grumman already has an extensive background in stealth design thanks to its bomber work.
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 13 Buys, five Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 22.88% loss in its share price over the past year, the average BA price target of $196.88 per share implies 27.93% upside potential.
