Boeing Stock Reaffirmed as Buy Despite Recent 20% Drop

Boeing shares (NYSE: BA) have taken a hit recently, dropping 19.4% since August 5 and falling to $193.56. The decline worsened on September 28 when FAA Administrator Bryan Bedford announced a temporary halt on MAX 10 certification due to a software issue in GE Aerospace flight-management computers, causing a 6.91% drop in the stock that day.

The FAA later ruled on October 2 that the glitch does not pose an unmanageable safety risk, allowing markets to reconsider the stock's recent decline. Jefferies has reaffirmed its Buy rating and $265 price target, suggesting a 37% upside from the current price.

The software fault affects versions 14 and 14.1 of GE Aerospace's flight-management computers on the 737 MAX 7 and MAX 10. While it can disable automated vertical navigation during an aborted landing, pilots retain full manual control. The FAA decided against requiring an immediate fix, opting instead for future software updates and information bulletins.

This decision keeps the MAX 10's certification and first deliveries on track for year-end 2026 and 2027, respectively. The fault's origin with GE Aerospace rather than Boeing has eased concerns about broader engineering issues. Additionally, Boeing secured a new four-year labor contract, averting a potential strike and ensuring operational continuity.

Jefferies analyst Sheila Kahyaoglu noted that the FAA's ruling allows the MAX 10 to be certified before year-end, with software updates expected at a later date. Despite a 15% year-to-date decline, the stock has shown signs of recovery, with a 5% bounce from Monday's close, suggesting potential buying interest below $200.