This post was originally published on this site
A Boeing 737 Max airliner piloted by a Federal Aviation Administration administrator taxis for a two-hour evaluation flight at Boeing Field in Seattle on Sept. 30.
(AFP via Getty Images)
Boeing Co. is scheduled to report third-quarter results on Wednesday before the bell, still smarting from a drop in demand for its commercial jets and the continued grounding of its 737 Max planes.
Wall Street will keep an eye on Boeing’s cash burn, comments on its liquidity, and any talks or indication of changes for its production rates. Max 737 updates are also high on the list.
Boeing BA, -4.09% earlier this month reported a 55% drop in third-quarter deliveries of commercial planes.
For the year, the aerospace and defense company said it delivered 98 commercial planes, compared with 301 commercial planes delivered in the same time span last year.
See also: Southwest Airlines to start filling middle seats, leaving Delta as last holdout
Boeing said it was still adjusting its production pace to match the fewer plane orders and cancellations from airlines across the globe as the pandemic continues to cut down on air travel demand.
Here’s what to expect:
Earnings: Consensus from 28 Wall Street analysts polled by FactSet calls for a GAAP loss of $1.48 a share for Boeing, which would contrast with a GAAP profit of $1.45 a share in the third quarter of 2019.
The analysts expect an adjusted loss of $2.31 a share, versus an adjusted profit of $2.05 a share a year ago. It would be a fourth straight quarter of GAAP and adjusted losses for the company.
Estimize, a crowdsourcing platform that gathers estimates from Wall Street analysts as well as buy-side analysts, fund managers, company executives, academics and others, is expecting an adjusted loss of $2.50 a share for the quarter.
Revenue: The analysts surveyed by FactSet expect sales of $14.19 billion for Boeing, which would be down from $19.98 billion a year ago. Estimize sees revenue of $14.22 billion for the company.
Stock movement: Boeing shares have lost 50% this year, compared with losses around 3% for the Dow Jones Industrial Average DJIA, -2.77% and versus gains around 5% for the S&P 500 index. SPX, -2.27% Boeing is a Dow component.
What else to expect: Boeing showed a drop in third-quarter deliveries, but September saw the fewest aircraft order cancellations since February, when the coronavirus crisis first started impacting Boeing’s order book, and far fewer than the spike in cancellations in March and April, analysts at Goldman Sachs said in a recent note.
Also on the brighter side, recent comments from a top European aviation-safety official earlier this month gave investors hope the 737 Max planes could return to service in the next few months.
The jets have been grounded world-wide since March 2019, following two deadly accidents less than five months apart believed to be connected to a faulty antistall system.
The planes’ return to the skies has been postponed several times and investors will be keen on hearing from Boeing if the plan still is to have the planes back in service this year, which could give the stock a short-term boost.
“Most institutional clients continue to view (Boeing) with trepidation given the cultural/financial issues at the company,” Credit Suisse analyst Robert Spingarn said in a recent note.
“This overhang of negative sentiment makes it difficult to see a substantial post-results rally except in the case of exceptionally better-than-expected results” or forward-looking comments “that can meaningfully alter the narrative,” he said.
Related: Boeing sees defense, air cargo as brighter spots for its business
Seaport Global’s Richard Safran said he remains bullish on the stock, and the third-quarter results are likely to be a “neutral to positive catalyst.” That’s because a below-consensus report is already expected, he said.
“It’s possible that management commentary reinforcing current production rates, indications of improving demand, and positive FCF in 2H21 could be a positive to the stock,” Safran said.
Boeing’s commercial planes and related businesses may garner outsize investor attention, but roughly 48% of Boeing’s revenue in the third quarter is expected to come from its defense business.
Don’t miss: After an unprecedented hard landing, the airline industry is facing a long path to a new takeoff
There has been “a trend of tempering expectations for ’21
growth from major defense competitors,” said Michael Eisen at RBC Capital Markets. Boeing is likely to benefit from ramping development programs and improved production of its KC-46, a military refueling plane, Eisen said.
