Boeing Production Growth and Delivery Increase Expected: BofA

Bank of America analysts have maintained a Neutral rating on Boeing, setting a price target of $200 per share in a recent note. They anticipate further production growth and increased deliveries in the upcoming months.

The bank’s report indicates that Boeing’s production and delivery forecasts for July are stable, with expected deliveries of 30-32 737 aircraft and six 787 aircraft. Analysts point out that recent insights suggest a significant production increase, thanks to the activation of Boeing’s third production line, which had previously been used for rework.

However, there is skepticism regarding Boeing’s ability to maintain a production rate of 38 aircraft per month for two consecutive months by year-end. Achieving this target would require a substantial 50% increase in production over a five-month period, potentially straining safety protocols and necessitating additional skilled mechanics.

The analysts expressed reservations, stating, “It remains skeptical about Boeing’s ability to sustain a production rate of 38/month for at least two consecutive months by the end of the year.”

The anticipated resumption of deliveries to Chinese airlines is expected to further enhance Boeing’s delivery figures. As of July 31, four customer acceptance flights for Chinese airlines have been reported, signaling the start of this process. Furthermore, 95 of the original 140 parked aircraft in China have now been reactivated, which includes 49 with Chinese registration and 36 with Indian registration.

Additionally, inventory levels show improvement, as reported by the bank. The number of undelivered 737 aircraft decreased from 197 to 187, encompassing all undelivered models, not just the 737-8s built prior to 2023.

“Considering these improvements and the imminent resumption of Chinese deliveries, we anticipate a continued upward trend in deliveries,” noted Bank of America.

Despite these positive developments, Bank of America remains cautious, highlighting the challenges that Boeing faces in achieving and sustaining its desired production rates.