Boeing Plunges 4.8% on Weak Results & 787 Charges

Shares of Boeing (NYSE: BA) were down 4.8% on January 26 to close at $194.27, after the aerospace company reported much wider-than-expected Q4 loss results.

Furthermore, the company revealed that its 787 Dreamliner program will cost significantly higher to the tune of $5.5 billion.

Q4 Numbers

Disappointingly, an adjusted loss of $7.69 per share fell massively short of analysts’ expectations of a loss of $0.42 per share. However, the loss was much narrower than the adjusted loss of $15.25 reported in the prior-year period.

Furthermore, revenues declined 3% year-over-year to $14.79 billion, and lagged consensus estimates of $16.59 billion. The decline in revenues reflects a 14% decrease in Defense, Space & Security revenue to $5.8 billion, partially offset by a surge in Global Services revenue, which increased 15% to $4.3 billion. Meanwhile, Commercial Airplanes revenues remained flat year-over-year.

Notably, Boeing, one of the trending stocks to watch today, turned cash-flow positive for the first time in nearly three years. The positive cash-flow was driven by a boost in its 737 Max deliveries, after regulators lifted bans on the jets.

787 Dreamliner Program to Incur $5.5 billion Costs

Due to manufacturing problems, Boeing stated that the Dreamliners program would cost the company $5.5 billion. These issues have prevented Boeing from delivering 787 Dreamliner jets for the last 15 months.

During the fourth quarter, Boeing recorded a pre-tax charge of $3.5 billion related to its 787 Dreamliners program. Likewise, Boeing expects to incur another $2 billion in additional costs, after it was forced to slash production of the planes.

CEO Comments

Boeing CEO, David Calhoun, commented, “2021 was a rebuilding year for us as we overcame hurdles and reached key milestones across our commercial, defense and services portfolios. We increased 737 MAX production and deliveries, and safely returned the 737 MAX to service in nearly all global markets.”

Looking ahead into FY2022, he further added, “On the 787 program, we’re progressing through a comprehensive effort to ensure every airplane in our production system conforms to our exacting specifications. While this continues to impact our near-term results, it is the right approach to building stability and predictability as demand returns for the long term.”

Wall Street’s Take

Following the Q4 results, Goldman Sachs analyst Noah Poponak reiterated a buy rating on Boeing, with the price target of $300 (54.4% upside potential).

Consensus among analysts is a Strong Buy based on 13 Buys and 4 Holds. At the time of writing, the average Boeing price target was 266.60, which implies 37.23% upside potential to current levels.

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