Is Boeing Stock a Buy Following Q3 Earnings?
As restrictions tightened in Europe amidst soaring fresh coronavirus instances, U.S. stock market went right into a tailspin this week. Naturally, the aviation market wasn’t spared, and in spite of better than anticipated Q3 earnings, neither was Boeing (BA). The stock concluded the week down fourteen %, further contributing to 2020’s bad performance.
Expectations had been low heading directly into the quarter’s print documents, as well as even with publishing a quarter consecutive quarterly loss, Boeing’s third quarter results came in in advance of Wall Street estimates.
Revenue decreased by 29.4 % year-over-year, yet usually at $14.1 billion still beat the Street’s forecast by $140 zillion. The loss on the bottom line was not as bad as expected, either, with Non-GAAP EPS of 1dolar1 1.39 beating popular opinion by $0.55.
Read also about:
Boeing found negative (FCF) no cost money flow of $5.08 billion, nevertheless, still, the figure was a development on the preceding quarter’s poor $5.6 billion. However, with so much uncertainty surrounding the aviation industry, Boeing’s hope of converting money flow positive next year appears a tad optimistic.
Being an outcome, RBC analyst Michael Eisen cut his 2021 estimation from FCF generation of $3.9 billion to a money burn of $5.3 billion. The change is mainly driven by further create of inventory,” that the analyst sees “surpassing $90 BN in early’ 21,” and also “a delay within the timing of liquidating those commercial aircraft. Eisen currently anticipates bad FCF until 1Q22, compared to the previous 3Q21.
Boeing announced it strategies on cutting a more 7,000 jobs. The company entered 2020 with 160,000 workers and has already reduced staff members by 19,000. The A&D giant said it expects to reduce the workforce lowered by to 130,000 by the tail end of 2021.
All of it points to an uphill fight, even thought Eisen believes BA can turn an operating profit in’ twenty one.
We feel profitability is still a wildcard as the company battles to get rid of price tag out of the system to offset a lack of demand restoration and often will largely be dependent on commercial demand improving, Eisen said. Longer term, the structural moves to consolidate operations by up to thirty %, buy of efficiencies, and completely management cost should certainly provide upside as desire recovers.
Further catalysts like the re-certification of the 737-MAX, the potential incremental orders of commercial aircraft plus defense contract awards, don’t stop Eisen’s rating an Outperform (i.e. Buy). The price target of his, during $181, implies a twenty five % upside out of existing levels. (In order to view Eisen’s record, press here)
BA gets mixed reviews from Eisen’s colleagues however they lean to the bulls’ side. According to 8 Buys, nine Holds and 1 Sell, the stock has a moderate Buy consensus rating. Upside of ~24 % could be in the cards, provided the $179 average price target. (See Boeing stock evaluation on TipRanks)