Boeing Stages 30% November Rally on 737 Max Return, Vaccine Hope

Updated: Nov 19, 2020

Boeing Co., the biggest laggard on the Dow Jones Industrial Average this year through October, is turning the tables in November with a 30% gain.

The shares are surging this month on the impending return of its 737 Max jet and promising vaccine trials from Pfizer Inc. that suggest an eventual rebound in the depressed market for jetliners. Another boost: Joe Biden’s victory in the 2020 election. Boeing would be a winner if Biden thaws relations with China, the largest overseas market for the 737 Max.

“For once in the last two years, things could go Boeing’s way,” said George Ferguson, an analyst with Bloomberg Intelligence.

The spate of good news is a reversal for a company that’s been slammed by the coronavirus pandemic and the collapse in demand for air travel -- and jetliners. Boeing was already reeling before the outbreak from the grounding of the Max in March 2019 after two deadly crashes. Even now, the Chicago-based planemaker must contend with a daunting outlook and a balance sheet laden with $61 billion of debt.

“Everybody’s looking so far forward right now,” Ferguson said. “They’re excited about what looks like the imminent return of the Max. They’re excited about the coronavirus vaccine from Pfizer.”

Boeing has surged 30% this month, the largest gain on the 30-member Dow, which has advanced 11%. The Boeing rally started days after executives outlined grim prospects for 2021. This week, the gains went into overdrive, spurred by the vaccine progress and imminent Max return.

The shares climbed 4.9% to $188.16 at 3:31 p.m. in New York even after Boeing released lackluster sales totals for October. Spirit AeroSystems Holdings Inc., which manufactures about 70% of the Max’s airframe, jumped 13%. Triumph Group Inc., another supplier, posted a similar increase.

Recovery Prospects

U.S. regulators are poised to clear the 737 Max to return to commercial flight as soon as next week. European regulators have also signaled they are satisfied with Boeing’s fixes to the plane’s flight-control computers and its new pilot-training courses.

An end of the grounding would enable Boeing to resume deliveries of the Max and start clearing its inventory of 450 jets built during the flying ban. The Max would be coming back as advances in vaccine development spur confidence in an eventual recovery in travel.

“Perhaps this will prove a false start but even so, we should be moving closer to a recovery,” said Seth Seifman, analyst with JPMorgan Chase & Co.

He upgraded Spirit and Raytheon Technologies Corp. to overweight, and raised his target price on Boeing more than 20% to $190.

#insiderkk Stock to watch as pandemic fears start to ease.