Shares of Boeing Co. (NYSE: BA) were trading 5.6% up on Tuesday, at the time of writing, on the news that Japanese airline ANA Holdings (ALNPY) placed the final order for 20 of the aerospace company’s 737 MAX planes.
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As part of the order, which was first announced in January 2019, ANA has the option to add 10 more of these narrowbody jets, a report published by Reuters said. The airline plans to replace its old 737-800 jets with new 737 MAX planes, deliveries of which will take place in the fiscal year starting April 2025.
According to the latest price list available on Boeing’s website, the order value for 737 MAX planes could be nearly $2.5 billion.
ANA said, “The new aircraft will be introduced to replace the Boeing 737-800, which are currently in operation on domestic routes, and will offer a more spacious and comfortable cabin with less noise than the existing model.”
Further, ANA has modified its order for 20 Boeing 777-9 passenger planes. It will replace the order for two of these aircraft with 777-8F freighters to enhance its cargo fleet. These freighters are likely to be delivered around 2028.
Boeing Could Stop Producing 737 MAX 10s
Recently, in an interview, Boeing’s CEO Dave Calhoun said that the airplane manufacturer could stop producing 737 MAX 10s, the longest version of its 737 MAX planes. This could result in billions of dollars of loss in sales for the company. The cancellation of MAX 10s would increase the demand for Airbus’ A321 NEO model.
A Boeing spokeswoman said, “We are working transparently with the Federal Aviation Administration (FAA) to provide the information they need and are committed to meeting their expectations and those of our customers to certify and deliver the 737-10. Safety remains the driving factor in this effort.”
Boeing Commands a Strong Buy Rating on TipRanks
Recently, Morgan Stanley analyst Kristine Liwag reiterated a Buy rating on the stock with a $215 price target (57% upside potential).
The analyst said, “We continue to see recertification of the 787; 737 MAX return to commercial service and resumption of deliveries in China; and 737 MAX 10 certification as the primary meaningful catalysts for Boeing’s stock.”
On TipRanks, the stock has a Strong Buy consensus rating based on 14 Buys and four Holds. Boeing’s average price target of $123.27 implies 55.7% upside potential from current levels.
Bloggers & Hedge Funds Are Bullish on Boeing
TipRanks data shows that financial bloggers are 71% Bullish on Boeing, compared to the sector average of 65%.
Meanwhile, TipRanks’ Hedge Fund Trading Activity tool shows that confidence in Boeing is currently Very Positive, as the cumulative change in holdings across all 22 hedge funds that were active in the last quarter was an increase of 141,100 shares.
Boeing Hopes to Regain Its Lost Glory
The ANA order comes as a huge positive for Boeing, which, following two deadly crashes, saw the grounding of its 737 MAX planes across the world in 2019. The U.S. grounding order on the jets was lifted in November 2020. Thereafter, 46 airlines resumed using the planes globally.
Additionally, the airplane manufacturer is optimistic about receiving the FAA’s approval for its 787 model, the deliveries of which have been discontinued due to quality issues.
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