Boeing: Starliner and Door Plug Headlines Moved the Stock, but Not Our $218 Fair Value Estimate

Boeing shares fell approximately 1% on news of NASA's decision to return its Boeing-built Starliner capsule from the international space station without crew, who now plan a return to Earth in early 2025 on a SpaceX vessel. Given persistent leaks in the thruster system of the Starliner, the decision seems prudent, and we don't see a meaningful financial impact on Boeing, which has already written off over $1.5 billion of cost overruns on the Starliner program. Separately, detailed reporting on the final assembly of the Boeing 737 MAX 9 jet that suffered a door plug blowout on Jan. 5, 2024, sheds damning light on Boeing's loss of control over its quality process. We have not altered our forecasts or $218 fair value estimate in reaction to either story. With our High Uncertainty Rating around Boeing's valuation, we consider the shares compelling only below $130.80 per share.