Boeing (BA) expects to release its second-quarter results early Wednesday amid signs of improving production and rising orders. Boeing stock rose near a buy point on Monday.
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European rival Airbus (EADSY) is also due to report on Wednesday. Their jet engine supplier General Electric (GE) publishes its results on Tuesday before the opening.
Dow Giant Boeing to provide update on 737 and 787 jets
Along with the second-quarter earnings report, aviation and defense giant Dow Jones is expected to update investors on its plans to increase production of the 737 Max to 38 per month from 31 later this year. Boeing is also looking to increase production of the 787 Dreamliner to five planes per month from three later this year.
Bank of America analysts are watching the impact of the recent short-lived strike by Spirit AeroSystems (SPR) union workers on Boeing’s production targets.
“We maintain that the pause could impact 737 Max production and profitability and result in an SPR charge related to the strike and its resolution,” BofA analyst Ronald Epstein wrote in a July 12 note to clients.
Boeing profits
Estimates: Analysts expect Boeing to widen its losses to 88 cents per share from 37 cents a year ago. Revenue is expected to rebound 11%, year over year, to $18.521 billion.
Results: Come back early on Wednesday.
Outlook: Wall Street forecasts another Boeing loss in the current third quarter, followed by a return to profits in the fourth quarter. For the full year, they expect Boeing to lose $1.29 per share, a marked improvement from a loss of $11.06 in 2022.
The company also guided free cash flow for the full year by $3 billion to $5 billion. For Boeing, the pace of aircraft deliveries is critical to its cash flow target, as customers make the bulk of payments on delivery.
Boeing stock rises near buy point
Shares of aviation giant Dow Jones climbed 1.5% to 214.89 in Monday’s stock action. Boeing stock is forming a flat base with a buy point of 223.91 above the 50-day moving average, according to the IBD MarketSmith chart. BA stock has been trading in a narrow range since mid-February, following a strong rally from last October.
Spirit stock gained 1% to 29.11 on Monday. Airbus shares rose 0.9% to 37.71.
Boeing stock helped lead the Dow Jones’ advance on Monday. The Dow is heading for its 11th consecutive day of gains.
See the momentum but the problems remain
Commercial aviation continues to recover from the Covid-19 pandemic, with renewed momentum from China’s reopening this year. Aircraft manufacturers are trying to increase production to meet strong demand from airline customers.
Boeing delivered 266 planes in the first six months of 2023 compared to 316 deliveries for Airbus. The Dow giant also reports a swelling of aircraft orders.
In the second quarter, Boeing managed to deliver 136 aircraft, an increase of 5% compared to the previous quarter. This included 60 deliveries in June, the most since March.
But Bank of America analyst Epstein noted that 13% of Boeing 737 deliveries in June came from storage, compared to 5% in April and May, amid a week-long work stoppage at Spirit AeroSystems.
In his July 12 memo, Epstein questioned whether the increase in deliveries in June was a sign that Boeing was “moving the page” or a sign of inventory reduction.
“This (more non-stock deliveries in June than before) could indicate that Boeing is not receiving ships at an adequate rate,” he said.
“We hope to have more clarity on the second quarter results as to the financial impact of these delays,” he added.
In China, nearly 90% of 737 Max planes had resumed commercial operations by the end of June. But it remains uncertain when Boeing will resume deliveries there, Epstein said.
Spirit reports August 2 before the market opens.
The aerospace supplier manufactures the entire body of Boeing’s best-selling 737 Max jet. It also manufactures fuselages and pylons for Boeing and Airbus, but has been the source of many problems.
Year-to-date, Boeing stock is up 11.7%, including a 3.4% gain in the past three months.
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