Boeing stock price forms a rare pattern, pointing to a 25% jump

Boeing stock price has sold off recently and is hovering near its lowest level since October 2022 as concerns about its business and the incoming Trump administration remain. It has crashed by 44% this year, bringing its market cap to over $107 billion. It remains about 66% below its all-time high, making it one of the worst-performing blue-chip stock in the US.

Victim of the upcoming trade war?

Boeing stock price has dropped in the past few weeks as investors reacted to the recent Donald Trump election. 

Trump has promised to restart his trade war with China by imposing a tariff of up to 60% of all imports.

Like in the past, China will ultimately respond to these tariffs by imposing some of its own. In the last trade war, China focused on sensitive sectors like agriculture.

This time, however, there is a risk that it will target Boeing, the second-biggest exporter after Appe. In this, the country may decide to impose higher tariffs on Boeing planes, a move that will push many of its airlines to opt for Airbus, a company that is creating better planes.

Such a move would have a major impact on Boeing, which has forecasted that China will need about 8,830 planes in the next 20 years. It also expects that the country will double its fleet by 2023 in a bid to meet the growing demand for passenger and cargo.

The challenge for China is that imposing large tariffs on Boeing will increase costs of its airlines and Airbus is not an easy solution because of its large backlog. 

Read more: Boeing strike continues as workers reject 35% pay raise proposal

Boeing’s turnaround is underway

Investors hope that Boeing’s turnaround will transform it into a success story over time. Besides, recent data shows that the company was still seeing demand for its planes, especially the 737 MAX. 

Just last week, the company received an order of 80 MAX jets from Avia Solutions Group, a top leasing company. It also received an order of Boeing 777 freighters from Emirates SkyCargo.

As part of its turnaround, Boeing has raised $15 billion and is in the process of buying Spirit AeroSystems in a $4.7 billion. It hopes that this acquisition will give it more control of the manufacturing of fuselages for planes like 787 and 737. 

The company is also working to reduce its costs by reducing bureaucracy across all its divisions. Additionally, it is considering exiting the largely unproftable space business. 

The most results showed that Boeing’s revenue retreated to $17.8 billion in the third quarter from $18.1 billion in the same period last year. Because of its challenges, is operating margin tumbled to 32.3% while its cash outflow rose to $2 billion. In his statement, the new CEO said:

“We have a lot of work to do, we have a plan, and change is already underway. This is a big ship that’ll take some time to turn. But when it does, it has the capacity to be great again.”

Boeing’s deliveries tumbled, while its commercial backlog stood at $428 billion or 5,400 planes. In contrast, Airbus has a backlog of over 8,600 planes, a figure that is continued to grow. 

On the positive side, there are signs that Boeing’s business will do well in the coming months, baring any more serious issues. Analysts believe that its revenue will drop by 12.2% this year to $68.26 billion and then it will bounce back to $86.56 billion next year. 

It will also turn a profit, with the average estimate being an earnings per share of 48 cents, a big increase from $15.96 this year. 

Analysts are also fairly optimistic that the Boeing share price will rise to $182.42, up by 25% from the current level.

Read more: Will a Trump presidency spell trouble for Boeing stock?

Boeing stock price analysis

The daily chart shows that the BA stock price has been in a downfall this year as challenges remained. 

It has remained below the 50-day and 100-day Exponential Moving Averages (EMA), meaning that bears are in control.

Most importantly, the stock has formed a falling wedge pattern, whose two lines are nearing their convergence level. 

Therefore, there is a likelihood that the stock will bounce back in the coming days as investors buy the dip. If this happens, the next point to watch will be at $160.15, its lowest level on April 25. A break above that level will increase the chances of the shares jumping to the analysts target at $182.42. 

The bullish view will be invalidated if the Boeing stock price drops below the key support at $137.82, its lowest point this year. 

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