Q3 Preview: Boeing (BA) Deliveries and Defense Budget Outlook In Focus
Tweet
Share
E-mail
Get Alerts BA Hot Sheet
Price: $214.20 -0.42%
Financial Fact:
Cost of products: -17.91B
Today's EPS Names:
BTTX, VAXX, ELYS, More
Financial Fact:
Cost of products: -17.91B
Today's EPS Names:
BTTX, VAXX, ELYS, More
Join SI Premium – FREE
Shares of Boeing (NYSE: BA) are trading down 1.16 percent to $64 on the day as the company is expected to report its third quarter 2011 results tomorrow ahead of the opening bell. Management has scheduled a conference call at 10:30 am ET to discuss the quarterly results.
The Street is currently forecasting that Boeing will report earnings of $1.09 per share on $17.87 billion in sales, up from $1.05 per share in earnings for the third quarter of 2010.
Going into earnings, 21 analysts rate Boeing a Buy while 10 rate them with a Neutral rating. Price targets from analysts range from $65 to $95 and average $83.70.
DA Davidson, who currently has a Neutral rating and $65 price target on the shares, has mixed expectations compared to the Street for the quarter. The firm estimates earnings will total $0.99 per share as sales increase 7.8 percent to $18.3 billion. They also anticipate a 150 basis point decline in operating margin to 6.7 percent. The firm believes management will cut its 747 and 787 delivery expectations for the year, the company's original guidance called for 25 to 30 deliveries.
DA Davidson notes the production rate is increasing in the company's commercial business, but also highlights that if the defense committee doesn't come to a defense spending budget by November 23, "there could potentially be a half of a trillion dollars in automatic defense spending cuts that would fall over a ten-year period."
While Boeing isn't Goldman Sachs top pick in the aerospace industry and earnings estimate of $1.06/sh and sales of $17.4 billion are below the Street's, the firm is still slightly bullish looking ahead. Goldman predicts management will increase its full year guidance again on 127 delivers during the quarter and to better reflect the 35 percent upside during the second quarter. Management only increased its full year guidance by 3 percent following last quarter’s substantial beat.
Goldman feels that new aircraft order demand, 737 MAX interest, the legacy program production ramp, the 787 and 747 production ramp, future cash flows, and the department of defense budget outlook will be the main topics discussed during the conference call. The firm currently has a Buy rating on the shares with a price target of $86.
JPMorgan is reduced its price target on shares of Boeing from $89 to $85 ahead of earnings, but is reaffirming its Overweight rating. The analyst at the firm states the block size of the 787 will be very largely anticipated by many and will be disappointed at anything over 1,000.
Due to higher than previously expected 737 and 777 deliveries, the firm increased its third quarter earnings estimate by $0.16 per share to $1.26 per share. JPMorgan reports that cash flows may be weaker than expected due to production delays with the company's 747-8 planes. The firm estimates strong inventory growth which will lead to 0 percent free cash flows growth.
JPMorgan analyst commented, "The larger the block size the longer Boeing can take to reduce 787 unit costs and still avoid a forward loss. Therefore, a block size greater than 1,000 would signal that Boeing will take longer than expected to come down the learning curve and that 787 unit costs will come down more slowly than expected. This would result in lower free cash flow, particularly in the 2014/2015 timeframe when we expect Boeing to be generating positive unit margins on the program."
Wedbush also notes the importance of 787 accounting block as it forecasts management will report it in the range of 1,000 to 1,200, with the upper end being more likely. They also state that anything over 1,000 could possibly be a positive for the stock. For the full year, the firm believes management will cut its 747-8 and 787 production expectations from 25 to 30 to 15 to 20 as they only suspect that the company will deliver 7 787s and 8 747-8s.
The firm is really bullish with its earnings estimate for the quarter as it calls for $1.16 per share on $17.97 billion in sales. Wedbush currently has an Outperform rating on shares of Boeing with a $91 price target. An analyst at Wedbush reports, "In the case of Boeing, we expect better results in both the commercial original equipment as well as the commercial services segment. However, we believe that any beats will be driven largely by commercial original equipment upside."
The Street is currently forecasting that Boeing will report earnings of $1.09 per share on $17.87 billion in sales, up from $1.05 per share in earnings for the third quarter of 2010.
Going into earnings, 21 analysts rate Boeing a Buy while 10 rate them with a Neutral rating. Price targets from analysts range from $65 to $95 and average $83.70.
DA Davidson, who currently has a Neutral rating and $65 price target on the shares, has mixed expectations compared to the Street for the quarter. The firm estimates earnings will total $0.99 per share as sales increase 7.8 percent to $18.3 billion. They also anticipate a 150 basis point decline in operating margin to 6.7 percent. The firm believes management will cut its 747 and 787 delivery expectations for the year, the company's original guidance called for 25 to 30 deliveries.
DA Davidson notes the production rate is increasing in the company's commercial business, but also highlights that if the defense committee doesn't come to a defense spending budget by November 23, "there could potentially be a half of a trillion dollars in automatic defense spending cuts that would fall over a ten-year period."
While Boeing isn't Goldman Sachs top pick in the aerospace industry and earnings estimate of $1.06/sh and sales of $17.4 billion are below the Street's, the firm is still slightly bullish looking ahead. Goldman predicts management will increase its full year guidance again on 127 delivers during the quarter and to better reflect the 35 percent upside during the second quarter. Management only increased its full year guidance by 3 percent following last quarter’s substantial beat.
Goldman feels that new aircraft order demand, 737 MAX interest, the legacy program production ramp, the 787 and 747 production ramp, future cash flows, and the department of defense budget outlook will be the main topics discussed during the conference call. The firm currently has a Buy rating on the shares with a price target of $86.
JPMorgan is reduced its price target on shares of Boeing from $89 to $85 ahead of earnings, but is reaffirming its Overweight rating. The analyst at the firm states the block size of the 787 will be very largely anticipated by many and will be disappointed at anything over 1,000.
Due to higher than previously expected 737 and 777 deliveries, the firm increased its third quarter earnings estimate by $0.16 per share to $1.26 per share. JPMorgan reports that cash flows may be weaker than expected due to production delays with the company's 747-8 planes. The firm estimates strong inventory growth which will lead to 0 percent free cash flows growth.
JPMorgan analyst commented, "The larger the block size the longer Boeing can take to reduce 787 unit costs and still avoid a forward loss. Therefore, a block size greater than 1,000 would signal that Boeing will take longer than expected to come down the learning curve and that 787 unit costs will come down more slowly than expected. This would result in lower free cash flow, particularly in the 2014/2015 timeframe when we expect Boeing to be generating positive unit margins on the program."
Wedbush also notes the importance of 787 accounting block as it forecasts management will report it in the range of 1,000 to 1,200, with the upper end being more likely. They also state that anything over 1,000 could possibly be a positive for the stock. For the full year, the firm believes management will cut its 747-8 and 787 production expectations from 25 to 30 to 15 to 20 as they only suspect that the company will deliver 7 787s and 8 747-8s.
The firm is really bullish with its earnings estimate for the quarter as it calls for $1.16 per share on $17.97 billion in sales. Wedbush currently has an Outperform rating on shares of Boeing with a $91 price target. An analyst at Wedbush reports, "In the case of Boeing, we expect better results in both the commercial original equipment as well as the commercial services segment. However, we believe that any beats will be driven largely by commercial original equipment upside."
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Walmart (WMT) PT Lowered to $130 at UBS on Investment Narrative's Competing Dynamics
- Arena Group to rename as Paradium.AI, ticker changing to PAAI
- Deutsche Bank monitors UK auto sales as Chinese exports grow
Create E-mail Alert Related Categories
Earnings, Insiders' Blog, Trader TalkRelated Entities
JPMorgan, D.A. Davidson, EarningsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
