Boeing losses widen, yet stock shows resilience

Big losses for Boeing have done little to damped sentiment, with the stock turning higher despite ongoing concerns.

Boeing struggles its way through 2020

Today's Boeing earnings have highlighted the difficulties facing a firm that has stumbled from one crisis to another, with the dual focus on both the impact of the global shutdown, and the ongoing process of returning the 737 to the skies.

Global lockdowns have grounded planes worldwide throughout the second quarter, and demand for Boeing’s products are clearly going to be a major concern as we move through 2020. That is being reflected from today’s numbers, with the company’s outlook for production showing a slower than expected plan for manufacturing as we move forward.

However, part of what could save this stock from a major selloff could be the fact that many of these heavily hit stocks have a somewhat pessimistic tone already built into prices, unlike those tech stocks, which have set a particularly high bar. The CEO has already stated that it will likely take the firm two-to-three years to recovery from this crisis.

Looking at the key Q2 takeaways:

- Revenues of $11.8 billion ($13.16 billion expected) vs $15.7 billion in Q2 2019

- Adjusted earnings per share (EPS) down to -$4.79 (-$2.39 expected) vs $5.82 in Q2 2019

- Operating cash flow of -$5.3 billion (-$6.6 billion expected) vs -$590,000 in Q2 2019

- Total backlog of $409 billion, which includes over 4,500 commercial planes

- 737 max production will be slower than expected, with gradual ramp up in output

- 747 jumbo jet to end production in 2022

- CEO hinted at potential for further job losses

- Announced the termination of their share buyback program

Awaiting lift-off amid Boeing consolidation

From a technical perspective, the Boeing share price has held up well despite growing fears over a second coronavirus wave. With two distinct legs higher throughout this recovery, we have been trading within a second gradual retracement phase that mimics the price action seen in April. Much like how a break through the $135.45 swing-high provided an eventual buy signal back in May, we need to see a break through the most recent swing-high to bring a bullish breakout signal (currently $182.92). Until such breakout occurs, we are faced with a likely continuation of the recent downtrend.

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