Boeing Earnings Preview: First Quarter 2009

Boeing [[BA]] is scheduled to report their first quarter 2009 results before the market opens on Wednesday, April 22. Based on our analysis, we at are expecting BA to report disappointing results that fail to meet Wall Street’s consensus expectations.


Analyst Expectations

We are forecasting revenues of $16.30 billion and EPS of $.90. This would represent a 2% increase in revenues from last year’s $15.99 billion in the same period. The current analyst consensus estimates calls for revenues of $16.70 billion and $.97 EPS. On January 28, the company provided full year 2009 revenue guidance of $68 – $69 billion and EPS of $5.05 – $5.35.


While first quarter results may look good in comparison to the strike-impacted fourth quarter results, we anticipate that Boeing will again disappoint Wall Street. Weakness within the airline sector is expected to continue to impact Boeing’s Commercial Aircraft segment.


Going forward, backlog adjustments could have a negative impact on Boeing’s future performance. We would expect falling consumer demand to lead to further production cuts as commercial airlines look to trim capacity.


Share Performance

Boeing’s shares have fallen 13% since the beginning of the year. In 2008, Boeing’s shares fell over 51%, as the stock underperformed the 34% decline in the Dow Jones index.



Shares are now trading at 8x consensus 2010 EPS estimates. This is below the relative valuations of their peer group. While Boeing shares appear to be attractively valued, we believe there is further downside risk to Wall Street’s consensus 2009 and 2010 estimates which could push the stock price down further.


Recommendation: Hold with a $35 price target.


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