Bright and early this morning, Barclays Capital decided to take its downgrade stick to Boeing (NYSE: BA). The aerospace firm was cut to Equal Weight from Overweight and its price target was slashed to $46 from $60. The analyst said the delays for the 787 project are largely the reason for the downgrade, noting that Boeing has yet to determine the schedule for the airplane or the financial impact of the delays. This latest downgrade is yet another hit for the Dow component, as it struggles to deal with the 787 project - which has caused a lot of problems for the company.
Here is my problem with the downgrade and price cut, it wasn't enough. Shares of BA find themselves struggling with overhead resistance from the 10-month moving average, which has forced the stock into a descending pattern ever since November 2007. This was the last time the stock managed to close atop the 10-month trendline, so to say that this resistance is entrenched would be a bit of an understatement.
Not only does the equity face a heaping helping of overhead resistance, but it also faces a poor market. Airlines are cutting services and raising rates, so the market is not conducive to make a lot of money in a short amount of time.
It should also be noted that the stock is trending sideways in the $42 region. Remember that the price target was slashed to the $46 region. The problem for BA is that in order to get to that target price, the stock will have to break through its 10-month moving average. But it has been nearly two years since BA toppled this trendline, so it could take some time for this to happen.
Perhaps Barclays is just getting ahead of the curve, so if the stock advances the brokerage can say, "We told you so ... a while back."
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Reader Comments (Page 1 of 1)
7-27-2009 @ 10:38AM
Dan Barnett said...
Come on.
Jamie Dulgosh trashed the stock just last week as #5 stock to avoid. World wide recession? Airlines struggling to find extra fees to become profitable? And Boeing's hot new product delayed because the WINGS FALL OFF.
I'm surprised that it took Barclay's so long to down rate and they still rate this dog as "Equal Weight". How about "Don't Buy It on a Dare".