(Bloomberg) — What a comeback year for Boeing Co. should have been the stock market’s worst drop since 2008, and if Wall Street is right, the plane maker’s shares may have only a modest recovery in store. 2025.
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The stock is down 35% this year, making it one of the 20 biggest decliners in the S&P 500 Index. Shares have stabilized over the past month, but investors remain wary. They point to the series of crises in 2024 that shook their confidence in Boeing’s prospects, and the risk the company will suffer if trade friction were to rise again under newly-elected President Donald Trump.
“Simply staying out of the news would be a win for Boeing right now,” said Eric Clark, portfolio manager of the Rational Dynamic Brands Fund.
In 2024, the company appeared to be recovering from the aftermath of two deadly plane crashes in 2018 and 2019 and the collapse of global travel during the pandemic. Boeing had taken a big step toward thawing tense relations with China, plane orders were up and stock prices were the highest in nearly two years. Wall Street was overwhelmingly optimistic, without a single sell rating on the stock.
Things started to unravel in January, when a door plug on a Boeing plane blew off in midair during an Alaska Air flight. Then came a public outcry and an intense investigation into Boeing’s business practices and culture, a management overhaul that led to the CEO’s departure, serious whistleblowing accusations, a debilitating labor strike and a massive cash burn that the company says will take place. continue in 2025.
The series of events has undermined Wall Street’s earnings expectations. Twelve months ago, analysts on average expected Boeing to earn $4.18 per share this year after four consecutive annual losses, according to data compiled by Bloomberg. They now expect a loss of $15.89 per share, the worst since 2020. At the same time, estimates for 2025, 2026 and 2027 are down about 50% or more from year-ago levels.
It all explains why analysts have gloomy expectations that the recent recovery in the aircraft manufacturer’s shares will continue much further. Their 12-month average price target suggests potential for a gain of around 7% from Friday’s closing price of $169.65.
Boeing, based in Arlington, Virginia, declined to comment.
Turbulence ahead
A major concern in 2025 is that the company’s vast global supply chain will remain vulnerable if Trump follows through with his tariff proposals. Boeing, together with American manufacturing giants such as Caterpillar Inc. and Deere & Co., widely seen as on the front lines of any trade war that might arise.
Boeing’s biggest concern, however, is a production slowdown — first in an effort to improve quality after the Alaska Air incident, and then because of a strike that ended in November. The combination will squeeze cash flow and erode its position against rival Airbus SE, which held nearly 60% of the global commercial aircraft backlog last year, according to Bloomberg Intelligence.
Furthermore, it has been decades since Boeing worked on an all-new aircraft, and CEO Kelly Ortberg has said that is one of its main objectives. Concrete signs that the company can produce quality aircraft at a steady pace will be critical for investors and analysts in 2025. There is ample global demand for aircraft, fueled in part by rising air traffic in emerging markets.
“The top priority is to meet this demand by building flawless aircraft at a gradually increasing pace,” JPMorgan Chase & Co. analyst Seth Seifman wrote. in a report last month. “This isn’t easy and we won’t see immediate results, but we do see potential for Boeing to make progress toward delivering long-term value in 2025.”
Last week the potential for the shares became apparent. News that Boeing has resumed assembly of its best-selling plane – the 737 Max – has contributed to the best weekly advance since mid-2023.
The company’s solid position in the market, as one of two manufacturers, explains why it still has a market capitalization of over $125 billion. Boeing has more than $500 billion worth of aircraft in its order book. It also raised $21.1 billion through a stock sale this year, which should help stabilize its credit rating.
“Boeing’s position in the duopoly with Airbus ensures the company’s viability, but does not guarantee financial strength,” said Mark Malek, chief investment officer at Siebert.
Trade disruptions could drive up costs as nearly half of the company’s suppliers are outside the U.S., threatening both revenue and margins, he said.
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