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Arlington, Virginia-based The Boeing Company (BA) is a major U.S. defense contractor and premier jet aircraft manufacturer. Its clients include domestic and foreign airlines, the U.S. Department of Defense, the Department of Homeland Security, NASA, other aerospace contractors, and various U.S. government and commercial communications customers. Its market cap currently stands at $112.5 billion. Boeing is scheduled to release its fiscal 2024 Q2 earnings results before the market opens on Wednesday, Jul. 31.
Ahead of the event, analysts expect Boeing to report a loss of $1 per share, expanding 22% from a $0.82 loss per share in the year-ago quarter. The company has exceeded Wall Street’s EPS estimates in three of the last four quarters while missing on one other occasion.
Boeing narrowed its loss per share by 11% year over year to $1.13 in the last reported quarter, beating the consensus estimate by 21%. This happened despite ongoing production challenges, including the reduced output of its bestselling 737 Max planes and the Federal Aviation Administration’s prohibition on increasing production following safety concerns.
Looking ahead, analysts expect Boeing to reduce its loss per share by 71.3% from fiscal 2023 losses of $5.81 per share to $1.67 in fiscal 2024. Moreover, in fiscal 2025, analysts anticipate Boeing to reverse its losses to a profit of $4.51 per share, up a whopping 370.1%.
Over the past 52 weeks, BA stock has plunged by 14%, trailing behind the broader S&P 500 Index's ($SPX) 26.9% gains and the Industrial Select Sector SPDR Fund’s (XLI) 12.4% returns during the same period.
Boeing’s underperformance relative to the broader market can be attributed to the significant challenges it faces across multiple fronts. In the first quarter, the company faced a substantial cash burn of $3.9 billion, surpassing earlier forecasts. Production setbacks, particularly with its 737 Max and 787 Dreamliners, emerged due to quality control issues and shortages of critical components. Regulatory constraints following an FAA directive after a safety incident have further complicated efforts to ramp up production.
Additionally, the aircraft company’s stock dipped 2.9% on Apr. 24, following the release of its Q1 earnings report. While it surpassed the bottom-line expectations, its revenue of $16.57 billion did not meet the Street forecast of $17.69 billion. Boeing's commercial airplane unit saw a stark 31% revenue decline, exacerbated by high compensation costs related to the incident.
Amid the operational hurdles, Boeing has revised its free cash flow expectations downward for 2024 and faces uncertainty in achieving its long-term $10 billion free cash flow goal. The company also grapples with leadership transition as CEO Dave Calhoun prepares to step down by year-end without a successor named yet.
Despite challenges, the current consensus opinion on Boeing stock is “Moderate Buy” overall. Out of 23 analysts covering the stock, 15 analysts suggest a “Strong Buy,” one recommends a “Moderate Buy,” six advise a “Hold,” and the remaining one analyst gives a “Strong Sell” rating. Over the past three months, two new recommendations have been added – one “Strong Buy” and one “Strong Sell” rating.
Furthermore, the average analyst price target for BA is $221.64, indicating a potential upside of 21% from the current price levels.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
