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Will Q4 earnings help Boeing’s share price take off?

Aircraft manufacturer Boeing [BA] is expected to report a 15.2% rise in year-over-year revenues and slightly better earnings when it reports its fourth-quarter results on 26 January. Sales will be cheered by healthy aircraft delivery numbers.

Analysts at Zacks forecast that it will report revenues of $17.6bn and an earnings loss of $0.14 per share, up from a loss of $15.25 the previous quarter.

The Boeing share price is expected to climb after the results, on further commentary on sales and deliveries. Earlier this month, the company said it had recorded a 67.8% year-over-year surge in commercial aircraft deliveries led by the 737 and a 38.2% hike in defence shipments, including Apache helicopters.

A rebound in passenger and business demand as the Covid-19 pandemic eases and passengers return to the skies has helped Boeing’s share price. Its aftermarket commercial services arm is also expected to have performed well as aircraft require maintenance orders come in.

“Commercial market demand continues to gain traction with broad-based vaccine distribution and border protocols beginning to open. Going forward, supply chain capacity and global trade will be key drivers of our industry,” said Boeing chief executive David Calhoun after its last earnings results.

Turbulent year

It has been a turbulent 12 months for the manufacturer, as Boeing’s share price remained flat at around $205 over that period. However, it soared to a high of $269.19 in mid-March as hopes of an end to the pandemic seemed to suggest that people would soon be able travel, and as low as $188.19 in early December when the omicron variant threatened a return to lockdown.

Boeing has also been hit by continued concerns around its 737 MAX aircraft, which has returned to service following two fatal crashes, and safety concerns around its 787 Dreamliner model halting shipments. More recently, Boeing warned that there may be potential flight disruption and delays caused by 5G technology close to airports affecting altimeters and landing gear.

How does Boeing’s share price measure up?

Boeing’s share price climbed 8.7% in the first two weeks of 2022 to close at $225.96 on 14 January, aided by its delivery numbers and hopes that the milder omicron could signal the end of the Covid pandemic.

However, the news that 5G interference could affect its 777 and 787 models caused the share price to drop by 3.5% on 19 January to $217.08, and it has since fallen to close at $205.44 on 21 January.

This compares its with main rival Airbus [AIR], which saw its share price rise by 26.9% over the past 12 months. Airbus delivered 611 commercial aircraft in 2021, compared with Boeing’s total of 340 in the same year, according to Zacks.

Boeing has a 6.37% weighting in the Invesco Aerospace & Defence ETF [PPA], whose share price has climbed 5.3% over the past 12 months.

Boeing’s previous earnings report performance

Boeing reported revenues of $15.3bn in its third quarter, up 8% year-over-year but below analysts’ forecasts of $16.3bn. Its adjusted loss per share came in higher at $0.60, compared with forecasts of $0.20, mainly due to the delayed deliveries of its Dreamliner jet.

The company added that its 737 programme was producing at a rate of 19 per month, progressing towards a production rate of 31 per month early in 2022.

Boeing Commercial Airplanes’ third-quarter revenue increased to $4.5bn, primarily driven by higher 737 deliveries. It added that it had a backlog of $290bn.

“We are driving stability across our operations, investing in our future and positioning our teams to deliver for our customers as the market recovers,” said Calhoun.

Boeing’s share price rose by 5.7% in the fortnight after the results were announced.

Wall Street expectations for upcoming earnings

According to CNN, analysts expect Boeing to post a loss per share of $0.35 and revenues of $16.5bn in the fourth quarter.

A return to flying as the pandemic eases will lead to more deliveries this year. According to Bloomberg, Boeing is expected to ship 121 commercial aircraft in the first quarter of 2022 and 613 over the year in total.

Boeing’s share price already bounced higher off the back of its deliveries update, but after concerns about potential 5G disruption sent the share price downwards, a recovery following the Q4 announcement will be dependent on service revenues, upcoming commercial and defence orders and more positive production news for the Dreamliner and 737.

A strong performance for the Boeing share price should lift other aircraft manufacturing firms and the air travel sector in general.

Looking ahead, analysts have an ‘outperform’ rating on the stock and an average target price of $263.58, according to Market Screener.

Cowen analyst Cai von Rumohr has a share price target of $265, owing to the upside of freighter sales and the “737 inventory burndown”. Von Rumohr believes the company is “positioned for hefty cash flow recovery in 2022”.

If the Q4 results provide a much-needed boost, Boeing could take to the skies in 2022.


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