Shares of Boeing (BA) declined 1.5% to close at $206.61 on Wednesday after the aviation, aerospace, and defense technology company reported a wider-than-expected third-quarter 2021 loss.
The company has posted an adjusted loss of $0.60 per share against the consensus estimate of a loss of $0.17 per share. It had reported a loss of $1.39 per share in the same quarter last year.
Revenues during the quarter rose 8% year-over-year to $15.3 billion but fell short of analysts’ expectations of $16.5 billion.
Sector-wise, the company’s Commercial Airplanes revenue increased 24% year-over-year on the back of higher 737 deliveries, partially mitigated by lower 787 deliveries. The segment deliveries stood at 85, compared to 28 in the same quarter last year.
Markedly, the 737 program is currently producing at a rate of 19 per month and ramping its production to reach the rate of 31 per month in early 2022. The current 787 production rate is around two airplanes per month, which is expected to reach five once deliveries resume.
The Defense, Space & Security segment recorded a 3% decline in revenues, while the Global Services unit posted a rise of 14%. (See Boeing stock charts on TipRanks)
Pandemic-related shutdowns undoubtedly impacted Boeing’s numbers. To that end, the CEO of Boeing, David Calhoun, said, “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 and the broader economy’s recovery.”
Following the third-quarter results, Vertical Research analyst Robert Stallard maintained a Hold rating and a price target of $240 (16.2% upside potential) on the stock.
Stallard said, “We think a rebasing of the 787 had been widely expected in the quarter, and so this shouldn’t come as a surprise. However, simple maths and the $1 billion anticipated cost would suggest that it is going to be another ~3-4 quarters before the rate gets back to 5/month. The next foot to fall is the 737 MAX – there’s nothing in the release on when we can expect China to recertify the plane, and the clock is ticking on Boeing’s forecast of a recert by year end 2021…So overall, we don’t see the stock moving too much in response to these numbers.”
The rest of the Street is cautiously optimistic about the stock and has a Moderate Buy consensus rating based on 9 Buys and 5 Holds. The average Boeing price target of $275.67 implies 33.43% upside potential. Shares have increased 39.5% over the past year.
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