One Wall Street analyst sees 27% upside for Boeing stock

because ofBoeing (NYSE: BA)will suspend its dividend in 2020, so the company's stock 竝ould not be appropriate for inclusion on the Dogs of the DOW list of dividend-paying stocks. But there's no question that Boeing has been a "dog" stock lately.

Boeing's stock price has fallen more than 15% in the past year due to quality problems, production slowdowns, whistleblower claims, and recent management turmoil. Standard & Poor's 500Other stocks in the index rose more than 22%.

But RBC Capital Markets isn't ready to give up on Boeing stock - not completely.

Is Boeing stock worth buying?

Citing an expected slowdown in future 737 deliveries, Royal Bank of Canada analyst Ken Herbert lowered his 12-month price target for Boeing to $215 per share, StreetInsider reported Tuesday. This implies a 26% upside from where the price was previously. Herbert also stuck to his prediction that Boeing will "outperform" the S&P 500 next year.

The crux of Herbert's thesis is that Boeing could replace outgoing boss David Calhoun with a new mat executive who would rise to the challenge of ultimately becoming the leader of a replica Boeing. But that's easier said than done.

I don't deny that Boeing has its advantages, advantages that might attract a new mat executive. Boeing has an order book of 5,568 airplanes, and the new mat exec doesn't even have to work for those orders! Boeing also has $4.4 billion in free cash flow each year - a figure that could more than double in the next three years as air travel continues to grow in the wake of the pandemic lockdown.

But Boeing also has major flaws. Boeing's business model of outsourcing aircraft parts to third parties has been discredited and has led to the production quality problems that plague Boeing today. Reinstating production in-house is possible, but it's not cheap. Boeing stock, with its $47 billion in long-term debt, will have a hard time paying for it.

Buying Boeing stock at 57x P/E is an expensive bet on Boeing's success. I'm not as sure as Herbert seems.

Should you invest $1,000 in Boeing now?

Consider this before buying Boeing stock:

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A Wall Street Analyst Says Boeing Stock Has 27% of Upside was originally published by The Motley Fool.