Boeing Stock: Boeing Co. (BA) saw a notable rise in its stock price on October 21, jumping 4.8% to close at $159.82, marking its highest level since early September. This surge follows news of a potential resolution to the labor strike that has significantly impacted the company’s operations. Over the weekend, the International Association of Machinists and Aerospace Workers announced that its 33,000 members would vote on a revised contract from Boeing on October 23.
The outcome of this vote could have major implications for Boeing’s future as the strike, which began on September 13, has cost the company an estimated $1 billion per month, halting production of key aircraft models, including the 737 and 777. The new proposal, Boeing’s third in less than two months, includes a 35% wage increase over four years and an increased ratification bonus of $7,000. Despite these concessions, Boeing has held firm on its refusal to reinstate its traditional pension plan, a sticking point for many union members.
Analyst reaction to the proposed deal has been mixed, with some trimming their price targets for Boeing in light of the increased costs. Seth Seifman’s team at JP Morgan maintained an overweight rating on BA stock but lowered their price target to $195 in light of the possibility that the labor agreement would result in at least a $1 billion increase in Boeing’s annual expenses. Jefferies analyst Sheila Kahyaoglu estimated the cost impact to be closer to $1.3 billion but did not provide a new price target, while Wells Fargo analyst Matthew Akers reduced his price target to $109 from $110, citing uncertainty over the contract’s approval.
Despite these worries, investor optimism about a potential labor dispute resolution and the company’s broader efforts to stabilize its operations have helped Boeing’s stock to remain resilient.
As the labor vote looms, Boeing is also gearing up to release its third-quarter earnings on October 23, with the company already warning of a substantial loss. Boeing reported preliminary results earlier this month, revealing a loss of $9.77 per share and a $6 billion quarterly loss, the largest since the pandemic decimated aircraft demand in 2020. Revenue for the quarter is expected to be around $17.84 billion, slightly surpassing analyst expectations of $17.82 billion.
Boeing’s new CEO, Kelly Ortberg, has been vocal about the need for the company to become leaner and more efficient. Since taking the helm in August, Ortberg has focused on addressing Boeing’s quality control issues, slashing 10% of its global workforce, and setting sights on reducing operational costs while keeping the company’s production capabilities intact.
Despite the challenging environment, analysts remain cautiously optimistic about Boeing’s long-term prospects. The conclusion of the labor strike, combined with Boeing’s efforts to streamline its operations, could provide much-needed stability. However, if the machinists reject the contract, Boeing could face an existential crisis, with the potential for more layoffs or even a bankruptcy filing.
For now, investors will be closely watching both the outcome of the labor vote and Boeing’s upcoming earnings report, with BA stock poised for further volatility in the coming weeks.
