Boeing Upgrades Long-Term Jet Market Outlook: Stocks to Gain

·4 min read

The Boeing Company BA recently revealed its long-term outlook for the global aircraft market, forecasting opportunities worth $9 trillion over the next decade. This reflects a solid 5.9% improvement over the prior long-term outlook made by America’s largest jet maker in 2020.  

This new projection is also 3.4% higher than $8.7 trillion worth of market opportunities projected by Boeing in 2019.

Highlights of the Outlook

Boeing forecasts global demand for new commercial planes to reach 19,000 by 2030, indicating an improvement of 3.5% from 2020’s figure. Market opportunities for commercial jets are now projected to be worth $3.2 billion over the next decade, which reflects a solid 10.3% hike over the prior 10-year forecast. Through 2040, Boeing projects commercial jet demand to be more than 43,500 new airplanes, reflecting an increase of about 500 planes from last year's forecast.

For the services market, Boeing forecasts long-term market opportunities worth $3.2 trillion, up 6.7% when compared to projections made in 2020. However, for the defense and space market, the aircraft giant continues to expect the market opportunity to remain at $2.6 trillion over the next decade.

What Led to the Increased View?

Since the beginning of 2021, a gradually recovering demand trend has been observed in commercial air travel, primarily in the domestic market, which offset the impact of the pandemic. Over the past few months, this improving trend has been more visible, buoyed by increased availability and distribution of vaccines that instilled confidence among air passengers.

This in turn has been bolstering the commercial aerospace along with the aftermarket aviation services market, which played the role of the key growth catalyst, boosting Boeing’s jet market outlook.

As far as the defense and space market is concerned, stability in demand has always been a savior for this section of the broader aircraft market. When Boeing lowered its outlook for the commercial jet market in 2020 from its prior view, the projections for the defense section were increased by 4%. So, this time, Boeing kept its defense outlook unchanged reflecting this market’s stability.  

Stocks to Gain

Considering the aforementioned discussion, we may safely conclude that with the release of Boeing’s latest outlook, the spotlight is primarily on major commercial jet maker stocks. These include Boeing and Airbus, which constitute more than 50% of the global commercial jet market, along with a few more, which hold solid growth prospects and hence should find a place on investors’ watchlist.

Boeing develops, produces, and markets commercial jets, along with providing related support services. The company is a leading producer of commercial aircraft and has a series of commercial jetliners like the 737 Next-Generation narrow-body model as well as the 747, 767, 777, and 787 wide-body models. This Zacks Rank #3 (Hold) stock boasts a long-term earnings growth estimate of 4%.

Airbus’ EADSY diverse product line includes renowned passenger jetliners, which vary in size from 100-seat jetliners to the double-deck A380 that is capable of transporting more than 850 passengers. Its significant jetliners are A220, A320, A330, A350, and A380. This Zacks Rank #3 stock came up with a solid earnings surprise of 132.26% in the last reported quarter. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Textron TXT is a renowned aircraft manufacturer of a variety of jets including business jets. Its Textron Aviation segment is home to the Beechcraft, Cessna, and Hawker aircraft brands. This Zacks Rank #2 (Buy) stock has a long-term earnings growth estimate of 28.3%.

Embraer ERJ designs and manufactures commercial as well as executive jets along with providing support services for aircraft, like modification, flight operation, and maintenance services. Its E-jets and E-jets E2 families of commercial aircraft are worth mentioning in this regard. This Zacks Rank #2 stock boasts a long-term earnings growth estimate of 17%.

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