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
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
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.
The Boeing Company (BA) reported a 4Q20 EPS loss of $15.25, which fell below forecasts (Tier4: -$1.30; Street: -$1.78) despite better-than-expected revenues of $15.3B (down 15% y/y). However, the company was forced to assume $8.3B of total charges, which included a $6.5M accounting block charge applied to the 777x program. Continue reading
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
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
The trading catalysts used in the near-term sell rating we had on The Boeing Company (BA) played out as expected, with the red flags detected in surveys turning into the talking points behind a disappointing 2Q20 earnings report and corporate view that is slanting down again. Continue reading
We are downgrading the shares of The Boeing Company (BA) to a SELL recommendation with a revised twelve-month target price of $132 (30% below yesterday’s close), following a final verification of a destabilized aerospace channel environment and rapidly falling contact expectations (looking out two years). Continue reading
Communications with aerospace contacts confirmed the Airbus management team’s intention to hold A320 build rates steady at 40/month. The new production schedules shared with major suppliers this week indicates no material change in planning for the next twelve months. Continue reading
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 […]
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