Since the turn of the year, Boeing (BA) shares have yet to finish a month in the green, adding up to a cumulative year-to-date loss of 54%. Boeing, along with the rest of the aviation sector, has been pummeled by the coronavirus. Although the ship has been somewhat steadied since the March lows, when the A&D giant appeared on the verge of bankruptcy, Canaccord analyst Kenneth Herbert believes investors should wait “for better visibility on order outlook,” before backing the stock.

Dusting off his “aerospace cycle models,” the 5-star analyst believes there are two main issues that need addressing in order to steady investors’ jittery nerves.

First up, what is the timeframe for airlines to increase order activity?

No doubt this is an essential issue. A book full of orders will indicate “increased confidence in the travel outlook,” and thereby reflect favorably on the industry’s financial outlook. The recent numbers though, are anything but confidence boosting. BA “booked negative 255 net orders in 2020,” including 281 Max cancellations.

“We expect additional cancellations on the MAX, with order activity likely not improving until 2021. While BA can spur demand with pricing, the risk of lower crude prices, elevated retirements, airline financial health and MAX inventory liquidation will contribute to lower replacement demand and capacity growth,” Herbert said.

The second issue concerns the expected production rates. Herbert believes BA is aiming for MAX production rates of 42 a month in 2022 and then up to 52 a month in 2023. Additionally, Herbert believes BA is looking to bring back 787 rates to 10 a month by 2023.

Based on current backlogs and potential delivery schedules, Herbert argues these plans are “overly ambitious.”

Herbert explained, “The relatively strong orders in 2016-2018 imply that Boeing is entering the downturn with one of the strongest backlogs (a positive), but this will limit near-term order activity and lead to cancellation risk.”

Therefore, despite acknowledging “the time to buy deep cyclical stocks like Boeing is when the industry is troughing,” the lack of visibility on the “pace of improvement in air travel and when airlines will start to order aircraft again,” is keeping the analyst on the sidelines.

Accordingly, Herbert reiterated a Hold rating along with a price target reduction – down from $175 to $155. (To watch Herbert’s track record, click here)

Looking at the consensus breakdown, opinions on BA are more split. the fence sitters come in slightly ahead, with 11 Hold ratings compared to 8 Buys and single Sell received over the previous three months. The upside potential lands at 8% as a result of its $162.11 average price target. (See BA stock analysis on TipRanks)

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