Bank of America analysts maintained a Neutral rating on Boeing (NYSE:BA) with a price target of $200 per share in a note Wednesday, anticipating further production growth and increased deliveries in the coming months.
The bank said that according to Aero Analysis Partners/AIR (AAP/AIR), Boeing's production and delivery forecasts for July remain stable, with expectations of delivering 30-32 737s and six 787s.
They note that AAP/AIR's insights suggest a notable production increase as Boeing's third production line, previously used for rework, is now operational.
However, analysts express skepticism about Boeing's ability to sustain a production rate of 38 aircraft per month for two consecutive months by year-end. They explain that achieving this rate would require a substantial 50% production boost over a five-month span, which could challenge safety norms and necessitate additional experienced mechanics.
Analysts note, "It remains skeptical about BA's ability to sustain a production rate of 38/month for at least two consecutive months by the end of the year."
The resumption of Chinese deliveries is expected to further boost Boeing's delivery numbers. As of July 31st, four customer acceptance flights destined for Chinese airlines have been reported, indicating the resumption of Chinese deliveries.
Additionally, BofA says 95 of the original 140 Chinese parked aircraft have now been reactivated, including 49 with Chinese registration and 36 with Indian registration.
Inventory levels also show a positive trend, according to the bank, with a reduction in undelivered 737s from 197 last week to 187. This accounts for all undelivered aircraft, not only the 737-8s built before 2023.
"Considering these improvements and the imminent resumption of Chinese deliveries, AAP/AIR anticipates the upward trend in deliveries to continue," stated BofA.
Despite these positive developments, Bank of America maintains a cautious stance, emphasizing the challenges Boeing faces in achieving and sustaining the desired production rates.