Analyst: Boeing Stock Could Soar 55%

Analysts were already xtremely optimistic ahead of today's bull note

Emma Duncan
Aug 16, 2018 at 9:34 AM
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Shares of Boeing Co (NYSE:BA) are soaring in early trading, after UBS upgraded the stock to a "buy" from "neutral," and raised its price target to $515 from $357. The firm pegged Boeing as the name in the aerospace and defense sector with the best outlook, as well as the stock with the highest potential margin expansion. This lofty price target represents 55% upside to Wednesday's close, and stands well into record-high territory. At last check, BA is up 2.9% at $341.20.

Overall, Boeing stock has been moving sideways following its early June record peak at $374.48, though recent pullbacks have found support near the $330 level. What's more, yesterday's sell-off was quickly contained by the equity's 200-day moving average -- a trendline not breached since October 2016 -- currently located at $328.07. Year-to-date, the Dow stock has picked up 15.7%.

Digging deeper, options traders have been showing bearish tendencies toward Boeing stock in recent weeks. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows the defense stock with a 10-day put/call volume ratio of 1.07, ranking in the 93rd annual percentile. This suggests that puts have been purchased over calls at a faster-than-usual clip. Given the stock's technical strength, some of this could be hedging activity.

Regardless, BA has consistently rewarded premium buyers over the past year. Boeing stock's Schaeffer's Volatility Scorecard (SVS) docks in at a healthy 90 out of 100. This suggests that BA has tended to make larger-than-expected moves on the charts, compared to what the options market was expecting.

Continuing with analyst sentiment, UBS' upgrade echoes the broader trend, with 13 of the 18 firms covering BA sporting "strong buy" recommendations. Plus, the stock's average 12-month price target of $410.09 comes in at a 20% premium to current levels.


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