Boeing shares remain stuck, down about 9% year to date while the S&P 500 has gained roughly 12.5% over the same stretch. Three overlapping pressures are holding the jetmaker back: an unresolved re-entry into China, the ongoing U.S.-Iran war, and the pace of the company's own 737 Max production. CEO Kelly Ortberg is just over two years into his turnaround plan, but investors are still waiting for a clear catalyst.
Boeing stock faces a tough road until the headwinds facing the company, both those in and out of its control, clear up. The company has become a wait-and-see story even as management works through its recovery plan.
China trade hopes fade before the summit
Hopes for new Boeing orders from China were sinking going into this week's talks between President Donald Trump and Chinese President Xi Jinping, according to Reuters. Xi arrived in Washington on Wednesday evening, and the two leaders held talks at the White House on Thursday focused on trade and artificial intelligence ahead of an evening state dinner.
Instead of a fresh deal, Boeing is said to be focused on getting China to finalize a commitment made back in May to buy 200 jets — the first major Chinese order for the aircraft since 2017. Without a firm order from a Chinese airline, however, it will be difficult for Boeing to get full credit for regaining its foothold in the market.
Iran war keeps oil, and pressure, elevated
Fiery rhetoric between Trump and Iranian President Masoud Pezeshkian at the United Nations this week did little to build hope for a lasting peace or a full reopening of the Strait of Hormuz. The seven-month-long conflict has pushed oil prices higher, a hurdle for the aviation industry because elevated fuel costs pressure airline margins and leave carriers less cash to buy new planes.
Boeing's current downtrend began in early August, around the time oil prices resumed their climb. On Thursday, Reuters reported the U.S. and Iran are discussing a phased deal to end the war and reopen the strait. With no deal announced, oil prices and bond yields stayed higher on the session, and West Texas Intermediate crude remained up about 65% year to date.
Production still trails the company's own targets
Boeing's internal turnaround adds a third layer of pressure. At the Morgan Stanley Laguna conference last Thursday, management said stabilizing 737 Max production at 47 planes a month is taking longer than planned because of wing issues. Ortberg said: "we just have not seen the flow improvements that we expected in the timeframe", since Boeing produces all the Max wings in Renton, Washington.
Still, after visiting the Renton facility last week, Wolfe Research called Boeing's progress there underappreciated. In a Wednesday note, Wolfe analysts said the improvement in wing production and final assembly appears imminent, with process changes in recent weeks already making a difference.
Source: CNBC
Trading involves risk.
Risk Disclaimer
