Argus maintained its Buy rating and $240 per share price target on Boeing (NYSE:BA) in a note Tuesday, saying they see a turnaround opportunity in the stock.
Boeing shares fell 8% on Monday in the wake of another issue with its 737 MAX jet. US authorities grounded some 737 Max 9 planes after a midair fuselage blowout.
However, the latest issue doesn't alter Argus's thesis on the Boeing turnaround. The firm believes Boeing has superior long-term prospects due to its leading presence in the growing commercial aerospace industry and its significant backlog.
"Further, its usually profitable Defense segment is a top-5 defense contractor," wrote the firm.
"The company faces numerous near-term challenges, both external (inflation, supply chain) and internal (aircraft issues). A new CEO has come on board and is making progress on the turnaround, though the latest accident involving a 737 MAX's fuselage raises new questions," acknowledged Argus.
"The shares are still down almost 50% from their all-time high of $440, set in February 2019, and offer value," they added. "Looking ahead, once the 737 MAX and 787 are fully back in production and Boeing is accelerating deliveries, we see earnings power of $15-$20 per share. It looks like that will be 2025-2026 at the earliest. Meanwhile, management is making progress on cash flow growth, which we think can lift valuation multiples."