Boeing stock fell Wednesday after the company reported earnings.
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Boeing first-quarter numbers showed that the commercial aerospace giant is still losing money and burning through cash as the Covid-19 pandemic continues to depress global air travel. Although the entire industry is struggling, Wall Street sees a silver lining.
Boeing said Wednesday that it lost $1.53 in adjusted earnings per share and burned through about $3.7 billion in the first quarter. Shares fell 2.9% during the session in response, while the S&P 500 and Dow Jones Industrial Average fell about 0.1% and 0.5%, respectively.
Baird analyst Peter Arment recognized the results were challenged in his research report. But while the company is still burning cash, he points out that the cash outflow is slowing down and will continue to do so as the company delivers planes from inventory.
Boeing has about 365 single-aisle 737 MAX jets in storage. The company plans to deliver about half of them this year and the remainder in 2022. Boeing also has about 100 twin-aisle 787 jets in storage. All of these are expected to be delivered in 2021. Arment projects positive free cash flow for Boeing in 2022, aided by the MAX deliveries. He remains positive on the stock, rating Boeing shares Buy. His price target is $306 a share. Boeing traded recently at $234.36 on Thursday, down just 0.5%.
Goldman Sachs analyst Noah Poponak is a shade more bullish. He rates Boeing share Buy and has a $307 price target. Boeing stock is also on his conviction list, reserved for his best ideas. He also noted in his research report that cash burn is improving, but Poponak doesn’t appear too focused on the latest quarterly results. He sees commercial air travel recovering and more stable order and production rates at Boeing, and is valuing the stock based on 2023 free cash flow.
Canaccord analyst Ken Herbert is another Buy-rated analyst although his price target is a little lower at $275 a share. He is also looking beyond first-quarter results to justify the rating. “While the [first quarter] results did not contain any material positive catalysts, they were largely in line with expectations,” he wrote.
Not everyone is as bullish as those three, however. Vertical Research Partners analyst Rob Stallard rates Boeing shares Hold with a $234 price target. He points out that Boeing’s total enterprise value, which is debt and equity, is within 10% of pre-pandemic levels. For him, that means the company will have to improve cash flow, profit margins, and reduce debt to see shares move higher from here.
And Credit Suisse analyst Robert Spingarn says there were “more negatives than positives” in the quarter, adding the company used more cautious language about China. Boeing expects the 737 MAX to be recertified for commercial service in the second half of the year—that’s a little later than investors might have expected.
Spingarn rates Boeing stock Hold with a $230 price target.
Boeing stock is up about 9% year to date, trailing a little behind comparable gains of the S&P 500 and Dow Jones Industrial Average.
Write to Al Root at [email protected]
