JPMorgan upgraded shares of Boeing, which are up 33 percent for 2017 through Thursday, saying the stock is still cheap and the aerospace leader will benefit from many industry tailwinds this year.
"BA is among the stocks best positioned to benefit from positive aero fundamentals," wrote JPMorgan's Seth Seifman in Friday's note. "BA is consciously trying to shape the industry to capture more value for itself, which could mean strong relative performance and potential upside to estimates."
JPMorgan raised Boeing's rating to overweight from neutral Friday, and set a new December 2018 price forecast at $240, representing 16 percent upside from Thursday's close.
Despite Boeing's success in the first half of the year, JPMorgan continues to see growth.
"We see moderate upside for aero stocks (10-25%) based on healthy aircraft demand and planned production increases," continued Seifman. "[Boeing] management has been proactive in addressing challenges the past 18 months and our EPS and FCF are modestly above consensus and so we expect Street estimates to move higher."
The analysts expect high single-digit aerospace growth demand should come from key emerging markets in Asia, the Middle East, and Latin America.
Boeing's performance this year is the best in the Dow, topping Apple's 27 percent year-to-date gain. The stock is up 1 percent in premarket trading Friday.
JPMorgan also reiterated that Rockwell Collins is its favorite stock in the whole industry, anticipating major growth from the avionics and information tech company.
"Accretion from the B/E Aerospace deal (including synergies), a new EPS methodology, and new accounting rules will boost headline EPS significantly," noted the report on Rockwell. "Headline EPS should provide a credible basis for valuing the stock."