Is Boeing Stock a Buy Following Q3 Earnings?

Is Boeing Stock a Buy Following Q3 Earnings?

As constraints tightened in Europe amidst rising fresh coronavirus cases, U.S. stock market went into a tailspin this particular week. Naturally, the aviation industry was not spared, and in spite of better than anticipated Q3 earnings, neither was Boeing (BA). The stock ended the week down fourteen %, further contributing to 2020’s bad performance.

Expectations were low heading into the quarter’s print files, and also despite publishing a fourth consecutive quarterly loss, Boeing’s third quarter results came in in front of Wall Street estimates.

Revenue decreased by 29.4 % year-over-year, yet during $14.1 billion nevertheless beat the Street’s forecast by $140 million. The loss on the bottom line wasn’t as terrible as expected, either, with Non GAAP EPS of 1dolar1 1.39 beating popular opinion by $0.55.

Read also about:

Boeing reported bad (FCF) free money flow of $5.08 billion, yet even now, the figure was a development on the earlier quarter’s poor $5.6 billion. However, with so much uncertainty surrounding the aviation industry, Boeing’s optimism of turning money flow positive next year looks a tad optimistic.

To be an end result, RBC analyst Michael Eisen cut his 2021 estimation from FCF generation of $3.9 billion to a cash burn of $5.3 billion. The change is mostly driven by further build of inventory,” that the analyst sees “surpassing ninety dolars BN in early’ 21,” as well as “a delay within the timing of liquidating those business aircraft. Eisen currently anticipates negative FCF until 1Q22, when compared to the previous 3Q21.

Boeing announced it plans on cutting an extra 7,000 tasks. The company entered 2020 with 160,000 staff and has already reduced staff members by 19,000. The A&D giant said it expects to cut the workforce down to 130,000 by the end of 2021.

It all points to an uphill struggle, nonetheless, Eisen believes BA can transform a running profit in’ twenty one.

We feel profitability is still a wildcard as the company battles to get rid of cost out of the system to offset an absence of demand restoration and often will largely be influenced by business need improving, Eisen said. Longer-term, the structural techniques to consolidate functions by up to thirty %, investment of efficiencies, and for ever control cost really should supply upside as need recovers.

Further catalysts such as the re-certification of the 737 MAX, the possible incremental orders of business aircraft in addition to safeguard get smaller honours, keep Eisen’s rating an Outperform (i.e. Buy). His price target, during $181, implies a twenty five % upside out of current levels. (to be able to watch Eisen’s background, click here)

BA gets reviews which are mixed from Eisen’s colleagues but they lean to the bulls’ side area. According to 8 Buys, nine Holds and 1 Sell, the stock has a moderate Buy consensus rating. Upside of ~24 % might possibly stay in the cards, given the $179 usual price target. (See Boeing stock evaluation on TipRanks)

Comments are Disabled