Recent Posts

Boeing Company (BA): Lowering Estimates Ahead Of The CY4Q Earnings Update

We are lowering estimates on The Boeing Company (BA) ahead of the 4Q21 earnings release scheduled for Wednesday, January 26, focusing on the downward bias to current BCA segment expectations. Upon final review monthly aircraft delivery reports, the recent commentary provided by airline industry executives, and feedback collected from the aerospace supply channel, we still see near-term earnings shortfall risk over the next 2-3 quarters and expect the executive management team to temper commercial aircraft delivery expectations for CY22 Continue reading

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2:03 AM

Boeing Company (BA): Communicating A More Conservative 787 Production Recovery Timeline; But Talking Up 777

We updated The Boeing Company (BA) model today, reacting to some of the information/thoughts shared by industry contacts following a supplier conference call held late last week. Bottom-line, while the management team formally pushed out 787 aircraft recovery expectations by roughly 6-7 months (as expected), the net-change to the production schedule did not reach worst-case scenario levels that had been speculated by certain company executives. This, combined with a modestly improved 777 program outlooks, resulted in a slight increase to our CY22-23 estimates. Continue reading

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8:31 AM

Boeing Company (BA): We See Increasing Risk To Commercial Aircraft Delivery and Production Forecasts

We are lowering estimates on The Boeing Company (BA) today to reflect lower commercial aircraft delivery assumptions and BCA margin contraction risk. Based on market intelligence collected from aerospace suppliers over the past few days, we believe there is increasing risk to the current 787 and 737 aircraft delivery/production forecasts, which could come into focus over the next few days. Continue reading

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7:59 PM

Aero Suppliers: The Global Supply Chain Could Be Facing More Bad 787 News

Indications from our latest aerospace channel checks suggests additional downside risk for global suppliers levered to the B787 aircraft program. Industry contacts now report growing demand headwinds associated with extended Dreamliner assembly lines halts and have started to reset 1H22 top-line expectations due to a slower-than-expected production recovery. This morning, we lowered estimates for the main companies in our coverage group to align with more conservative B787 build rate assumptions for CY22.formal issuance of strong LEAP jet engine production guidance. Both items should be considered bullish data points for the specialty materials and upstream aero supply peer groups, and the main drivers behind accelerated top-line growth and strong earnings contribution over the next 2-3 years. Continue reading

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9:57 AM

The Boeing Company (BA): Lowering Estimates Ahead Of Quarterly Update On Revised BCA Segment Outlook

We lowered estimates to better align with weaker-than-expected aircraft deliveries, increased 787 program cost assumptions, and indirect headwinds tied to COVID-19. As mentioned in a note issued earlier this week, we believe investors should prepare for a kitchen-sink quarter, with management potentially resetting delivery, operating margin, and FCF expectations. In conjunction with an increasingly cautious near-term outlook, we reduced the twelve-month target price to $250/share. Continue reading

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12:40 PM

The Boeing Company (BA): Updated Scenario Analysis Based On Existing Commercial Aircraft Production Schedules

We updated The Boeing Company (BA) model to align with expected commercial aircraft deliveries and future production changes. Revised assumptions for the BCA segment resulted in a slightly lower earnings outlook for this year and CY22, with the primary negatives related to the 737 and 787 aircraft programs. Downward adjustments aside, we still believe the BA shares are attractively valued today, especially after completing our EPS upside analysis. Bottom-line, the core portfolio earnings power strengthens considerably (and the FCF generation) if the company can realize those aggressive aircraft production targets embedded in the latest schedules shared with the global supply chain. Continue reading

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10:05 AM

The Boeing Company (BA): Expect A Bumpy Path To Earnings Recovery; Lowering Estimates

We are lowering estimates on The Boeing Company (BA) to account for the approaching commercial aircraft segment shortfall. We expect total deliveries to fall about twenty jets below 2Q21 forecasts as another FAA inquiry has resulted in a 787-customer shipment halt, which translates into roughly $0.50/share of near-term earnings dilution in our model. Presumably, consensus expectations will reset following the company issuance of another disappointing monthly aircraft delivery report in early July. Continue reading

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7:32 AM

The Boeing Company (BA): New Production Schedules Confirm Management Confidence In 737 Demand – Upgrading Shares To Outperform

We are upgrading the shares of The Boeing Company (BA) to an OUTPERFORM recommendation today, with a twelve-month price target of $275/share, following the early identification of positive trading catalysts expected to develop in the coming months. Notably, our latest aerospace channel checks, which included discussions regarding the latest commercial aircraft production schedules released to all major suppliers, seems to be indicating an upward bias to Street expectations (focusing on CY22 and beyond). Continue reading

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9:37 PM

The Boeing Company (BA): Dissecting A Fifth-Consecutive Quarterly Earnings Loss; Will Number Six Be The Last?

A relatively upbeat aerospace market and corporate outlook provided by The Boeing Company (BA) management team, which was confirmed later in the week by Airbus (AIR), indicates the OEMs are nearing a point of stabilization. Assuming the current 737 MAX electrical situation does not become systemic problem, we believe the earnings shortfall risk may be starting to abate. We plan to take a closer look at the industry drivers and company modeling assumptions upon completion of our aero supply channel checks.

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9:00 AM

The Boeing Company (BA): Downgrading To Underperform On Commercial Aircraft Demand And Balance Sheet Concerns

We downgraded the shares of The Boeing Company (BA) to UNDERPERFORM this evening following a thorough review of important macro drivers and the secondary data collected from our aero supplier surveys. Ahead of the company’s 4Q earnings update, scheduled for late-January, we believe BA shares could dip below $200 should the investor focus shift to a muted earnings growth outlook and balance sheet stress. Coincidently, we are also less-bullish on our beloved Cleveland Browns heading into the Sunday playoff game, but we digress… Continue reading

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4:47 PM

The Boeing Company (BA): 3Q20 Results Were Generally In-line, But CY21 Visibility May Be Waning

Despite a relatively solid earnings update, which beat our forecast for the first time in four quarters, we are unable to construct a convincing bull-case argument. We ultimately came away with from yesterday’s update with limited earnings and FCF visibility, still digesting the conservatism embedded in management’s commentary. While there were no formal changes made to aircraft build rates, downward adjustments seem almost inevitable against the backdrop of waning demand. Continue reading

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7:58 AM

The Boeing Company (BA): Those Parked Jets And BA Shares Will Fly Again

We are upgrading the shares of The Boeing Company (BA) to an OUTPERFORM recommendation (versus a sell), expecting the aerospace industry and individual company headlines to be less-negative going forward. The current share price of $120 seemingly discounts all of the main risk(s) associated with a difficult 1H20 customer demand environment and potential 2Q earnings shortfall. Our commercial aerospace channel checks have been pointing south for most of the year, including the subdued contact feedback […]

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9:00 AM

The Boeing Company (BA): The Type of Turbulence It Could Take Years To Recover From – Starting Coverage With A SELL

We are initiating formal coverage on the shares of The Boeing Company (BA) with a SELL recommendation and a twelve-month price target of $120. We expect the stock to trade lower once consensus estimates are reset and aligned with an increasingly negative commercial aircraft production outlook, a sharp pullback in aftermarket sales, and a 1Q18 earnings shortfall. We came away from a bottoms-up look at the company, which included proprietary aerospace supplier survey-work and follow-up analysis, with an incrementally bearish and view of the company and industry. Continue reading

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9:00 AM
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