Boeing (NYSE:BA) Loses Ground With NASA, Shareholders

Today was rough for aerospace stock Boeing BA -3.49% ▼ , at least, so far. New reports found that NASA planned to cancel a substantial portion of the $3.2 billion SLS Stages Production and Evolution Contract, which was basically set to move NASA’s moon rocket plans forward. That news hit investors just as hard, and Boeing shares lost nearly 3.5% in Thursday afternoon’s trading.

Claim 70% Off TipRanks Premium

• Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions

• Stay ahead of the market with the latest news and analysis and maximize your portfolio’s potential

Things between Boeing and NASA have been tense ever since the Starliner debacle that saw what should have been a mission lasting weeks turn into a mission that lasted nearly a year instead. NASA offered Boeing a contract from its Space Launch Systems, building core stages for the Artemis 3 and 4, along with landing material for the Artemis 5 and 6 core stages. Boeing was also on hand to build Exploration Upper Stages (EUS) for Artemis 5 and 6. That part of the contract, however, has been canceled.

NASA cited two key factors in the announcement. The first was what reports called “major developmental delays,” which would be bad enough. The second was almost insult added to injury: the fact that the EUS system is “drastically over budget.” Given that EUS costs went from around $982 million in 2017 to around $2.8 billion by 2028, the costs likely were getting too high to stand.

“Wild Speculation, Inconsistent with Facts”

Meanwhile, there is another problem emerging for Boeing surrounding AI-171, the Air India flight that mysteriously went down several months ago. Speculation was already running rampant at the time, especially given the sheer number of bizarre factors involved. The unexpected deployment of the ram air turbine system, which suggested a loss of power, was one factor among several that caught interest.

Dr. Brendan Nelson, chief of Boeing Global, got a bit indignant when asked about AI-171, declaring that he was “…not going to comment on, or add to, wild speculation that is not consistent with facts.” The fact that there are so few facts to draw on only compounds the problem. The investigation into the crash is expected to conclude in the middle of this year, so we will have some distance to go before reaching that point.

Is Boeing a Good Stock to Buy Right Now?

Turning to Wall Street, analysts have a Strong Buy consensus rating on BA stock based on 13 Buys and one Hold assigned in the past three months, as indicated by the graphic below. After a 43.48% rally in its share price over the past year, the average BA price target of $278.17 per share implies 26.94% upside potential.

Disclosure

Disclaimer & DisclosureReport an Issue