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Boeing (BA) and United Airlines (UAL) are scheduled to make a joint “historic announcement” at Boeing’s South Carolina facility on Tuesday, Dec. 13. The announcement could potentially confirm last Friday’s reports that United Airlines is buying dozens of Boeing 787 Dreamliner jets. BA stock rose premarket Friday following the announcement.
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Boeing earned an upgrade Wednesday after buzz about the deal sent BA stock flying last week. Meanwhile, the airplane manufacturer rolled out its last 747 on Tuesday, wrapping up production of the jumbo jet after more than 50 years.
Bank of America analyst Ronald Epstein raised his price target on Boeing stock to 190 from 165 on Wednesday, and maintained a neutral rating on the shares. The upgrade cited optimism on commercial aerospace following the November investor day, he wrote in a research note.
Epstein thinks the Boeing 737 Max 7 and 737 Max 10 should eventually get congressional approval, for changes required following deadly crashes involving the aircraft in 2018 and 2019. However, there could be some challenges with the execution, Epstein wrote. The potential United Airlines deal should also give Boeing a boost.
United Airlines Deal
United Airlines is preparing to order around 100 planes to replace its aging widebody jets and Boeing 767 fleet that experienced operational issues over the last year, the WSJ reported. The Chicago-based airline’s securities filings list more than 50 Boeing 767s in its fleet.
It’s unclear how many Dreamliner jets United would order in the deal, which could close as soon as this month. But people familiar with the late-stage talks say it could include confirmed orders and future purchase options for 50 or more aircraft.
United Airlines Stock Flies Into Buy Zone
United, Boeing and European plane maker Airbus (EADSY), which competed in the deal, declined to comment on the rumors.
The aircraft in the 787 Dreamliner family range from roughly $248 million to $338 million before discounts depending on the model. Boeing currently has a backlog of 4,441 planes, including 488 orders for its 787 Dreamliners, according to the company website.
Ending The 747
Boeing’s last 747 rolled off the assembly line Tuesday as production of the iconic jumbo jet ends after more than 50 years in the skies. The humped-back plane has served as Air Force One since 1990 and was used to ferry NASA’s Space Shuttle on its back.
But the “Queen of the Skies” is costly to fly and the company saw demand for 747 passenger jets dwindle by 2017. Boeing announced it would stop building the 747 in 2020 as customers favored the more fuel-efficient 777 freighter or retrofitted 747 passenger jets as freighters.
UAL And Boeing Stock
BA stock rose 1%, near 179 before the opening bell Friday. The stock is down about 2% this week after shares ascended 4% to 182.87 last Friday, hitting its best level since April. The move put the stock briefly beyond the 5% chase zone from a 173.95 buy point for a cup base. As of Friday, Boeing stock is back in the buy zone, which runs up to 182.65, after breaking out on Nov. 11.
The relative strength line is at its best levels since February, reflecting Boeing stock’s outperformance vs. the S&P 500 index. The stock has an 87 RS Rating out of a possible 99, indicating strong performance compared to its peers in the S&P 500.
UAL stock is also toying with a buy point at 45.67. Shares briefly topped the entry Monday and Tuesday, before pulling back to test short-term support in Wednesday’s session.
You can follow Harrison Miller for more stock news and updates on Twitter @IBD_Harrison
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