I believe it was Baron Rothschild, who said "the time to buy is when there's blood in the streets." And Warren Buffett famously said "be fearful when others are greedy, and greedy when others are fearful."
BA stock has certainly been beat down, currently sitting at -56.3% off it's highs in February and March 2019. Not an easy two years...let's recap:
The questions is...is the worst over and is there a clear path to recovery?
I will start with a technical view as that's my primary analysis framework...
First of all, be aware of a strong resistance area at the $240 level. Since the gap down on 9 March 2020 (Covid related sell off), we got two clear reactions. Another observation I find interesting, while trading below this resistance, the stock goes though volatility contraction and expansion phases. We're right now in a volatility contraction phase (resembling a bull flag) and an impulsive move to the upside is probable. Second observation, notice the series of higher lows preceding initiative buying. This signals to me that buyers are getting stronger and stronger and a break above resistance is only a question of time.
On the fundamental side...
The company reported Q4 earnings on 27 January 2021. The earnings call was positive and well received, with Morgan Stanley immediately double upgrading the shares, viewing it as a pandemic recovery trade. The path forward was not fully clear in the company presentation, but they certainly have better visibility now with the MAX certified in a growing number of countries. And all the writedowns and cuts to production to de-risks earnings estimates provide a platform for Boeing for further upside.
Summary
I will be looking to enter a trend upon breakout from the bull flag indicated on the chart. I will aim to take partial profits at the $240 resistance but add further to position if and when we get a clear break. Following profit targets would be $300 and $350.
BA
BA stock has certainly been beat down, currently sitting at -56.3% off it's highs in February and March 2019. Not an easy two years...let's recap:
- The Boeing 737 MAX was grounded worldwide in March 2019 after two crashes and 346 people being killed.
- Following the 737 MAX crisis, they sold only 54 planes in 2019 (compare to 893 the year before)
- Going into 2020, the company reported its worst annual orders in at least two decades.
- They lost the title of world's biggest plane maker to Airbus.
- The company was already in crisis when Covid struck.
The questions is...is the worst over and is there a clear path to recovery?
I will start with a technical view as that's my primary analysis framework...
First of all, be aware of a strong resistance area at the $240 level. Since the gap down on 9 March 2020 (Covid related sell off), we got two clear reactions. Another observation I find interesting, while trading below this resistance, the stock goes though volatility contraction and expansion phases. We're right now in a volatility contraction phase (resembling a bull flag) and an impulsive move to the upside is probable. Second observation, notice the series of higher lows preceding initiative buying. This signals to me that buyers are getting stronger and stronger and a break above resistance is only a question of time.
On the fundamental side...
The company reported Q4 earnings on 27 January 2021. The earnings call was positive and well received, with Morgan Stanley immediately double upgrading the shares, viewing it as a pandemic recovery trade. The path forward was not fully clear in the company presentation, but they certainly have better visibility now with the MAX certified in a growing number of countries. And all the writedowns and cuts to production to de-risks earnings estimates provide a platform for Boeing for further upside.
Summary
I will be looking to enter a trend upon breakout from the bull flag indicated on the chart. I will aim to take partial profits at the $240 resistance but add further to position if and when we get a clear break. Following profit targets would be $300 and $350.
BA