stock was upgraded to Buy on Thursday. But the shares were trending lower in premarket trading as the analyst also trimmed his price target and said he still preferred rival Airbus.
Citi analyst Charles Armitage raised his rating on
) to Buy from Neutral, saying he saw a couple of near-term catalysts that could help the stock deliver “significant value” to investors. The catalysts include the resumption of 787 model deliveries, and the return to service of the 737 MAX model in China as Covid restrictions lift.
“While we acknowledge there are questions as to whether reasonable levels of profitability and market share will be achieved, we also feel that this potentially misses a valuable investment opportunity,” Armitage wrote in a research note.
Despite the upgrade, Boeing isn’t Armitage’s top pick. He believes rival
) is a “materially” lower risk pick with a similar upside. Even Boeing’s near-term catalysts come with significant risk, the analyst added. For example, he has a host of concerns about the 737 MAX, including whether it can capture enough market share and become a profitable segment for Boeing.
Margins are a big point of contention for Armitage, who is worried that they could remain low in the foreseeable future for 777X and 787 models.
The analyst cut his price target on Boeing to $209 from $219 due to assumptions that there will be a slightly slower recovery and higher debt this year.
Boeing stock was down 1.2% to $132.13 in premarket trading on Thursday. The shares have lost 33% this year.
Write to Sabrina Escobar at [email protected]