Boeing earnings preview: analysts remain cautious before Q2 results

We examine when Boeing is set to report their second quarter (Q2) results, what analysts are currently saying about the stock, as well as take a brief look at the company’s Q2 delivery figures.

When will Boeing report its next set of quarterly results?

Aerospace giant Boeing (BA) is set to release its second quarter (Q2) results to the market next Wednesday, 29 July.

Analysts remain ‘lukewarm’ on the stock

Heading into the Q2, analysts remain mixed on the US$99.5 billion company, with BA currently commanding a Hold rating on average, according to MarketWatch. This lukewarm reception should come as little surprise, given the controversy around the aerospace giant’s flagship 737 MAX passenger airliner, following two high profile crashes in 2018 and 2019 that killed 346 people. For reference, Boeing’s 737 has been grounded since March, 2019.

Though the MAX remains grounded, on Tuesday, 21 July the Federal Aviation Administration (FAA) issued a statement noting that it would soon issue an Airworthiness Directive related to the Boeing 737 MAX aircraft.

The stock hit an intraday high of US$182.65 per share, on the day that news was released.

This comes after the regulator issued a statement in June noting ‘that the Boeing 737 MAX will only return to service following the completion of a comprehensive and rigorous review process.’ Saftey said the FAA, not a pre-determined calendar or schedule, is the primary consideration in determining the airworthiness of the 737.

Those considerations aside, at Boeing’s last traded price of US$176.45 per share – the current average analyst price target of US$182.50, as reported by MarketWatch, implies that the company’s stock is trading at close to fair value, though may have room to run a shade higher.

Boeing share price: the knowns

While investors are likely eagerly awaiting Boeing’s second quarter results, the company last week provided the market with its Q2 delivery figures – across its commercial and defence operations.

Here the company reported that it delivered 20 commercial airplanes during the quarter, including four 737s and seven 787s. The company made a total of 44 defence deliveries in Q2 FY20, down from the 83 it made in Q2 FY19.

The above figures, flagged the company, are not considered final until the quarterly financial results are released next week.

Reflecting on these delivery figures – Greg Smith, Boeing’s vice president of Enterprise Operations, chief financial officer and interim leader of Communications – said:

‘Our commercial airplane deliveries in the second quarter reflect the significant impacts of the COVID-19 pandemic on our customers and our operations that included a shutdown of our commercial airplane production for several weeks.’

First quarter results at a glance

In April, Boeing reported total Q1 revenues of US$16,908 million, representing a year over year decline of 26%, against a GAAP loss of US$1,353 million. The company said these weaker results were driven by the coronavirus pandemic as well as the grounding of its 737 MAX airplanes.

‘As the pandemic continues to reduce airline passenger traffic, Boeing sees significant impact on the demand for new commercial airplanes and services, with airlines delaying purchases for new jets, slowing delivery schedules and deferring elective maintenance,’ the company said in a statement.

Mind you, despite weaker top and bottom-line results, during the first quarter Boeing reported an impressive backlog of orders, totalling US$439 billion. This backlog is comprised of commercial airplanes (US$352 billion) and Defence, Space & Security aircrafts (US$64 billion).

With the uncertainty of the coronavirus pandemic weighing on equities across the board, the Boeing share price has proven extremely volatile: trading between US$89.00 per share to US$391.00 per share, over the last year.

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