Booming Boeing Stock Overdue for Upgrades

BA stock hit a record high earlier

Jan 31, 2018 at 10:40 AM
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Excluding a $1.74 per share boost from tax reform, Boeing Co (NYSE:BA) reported better-than-expected fourth-quarter profit of $3.06 per share, thanks to solid 737 deliveries. The company also gave strong full-year guidance, and forecast a record-setting year for aircraft deliveries.

In reaction, BA stock hit a record high of $360.97 out of the gate, and was last seen trading up 6.2% at $358.67. This is just more of the same for Boeing shares, though. Not only is the security pacing for its fifth straight monthly win, it's up 118% year-over-year. Plus, BA is easily the best Dow stock of 2018 so far.

Options traders have been quick to weigh in this morning, too, with roughly 70,000 contracts traded so far -- four times what's typically seen at this point in the day, and volume running in the 100th annual percentile. The weekly 2/2 355- and 360-strike calls are most active, with new positions being initiated at both. There appears to be a mix of buying and selling here, though, as traders bet on where BA will finish the week.

More broadly, the trend in recent weeks has been toward long calls. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day call/put volume ratio of 1.71 ranks in the 96th annual percentile -- meaning calls have been bought to open over puts at a quicker-than-usual clip.

And while most analysts echo the optimism seen in BA's options pits, seven of 16 brokerages still maintain a tepid "hold" recommendation. Plus, the average 12-month price target of $351.21 stands at a discount to Boeing's current price. A round of well-deserved upgrades and/or price-target hikes could draw even more buyers to the equity's table.

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