Boeing Earnings Preview: Second Quarter 2009

Boeing [[BA]] is scheduled to report their second quarter 2009 results before the market opens on Wednesday, July 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 $1.16 billion and EPS of $.10. This would represent a 14% increase in revenues from last year’s $16.96 billion in the same period. The current analyst consensus estimates calls for revenues of $17.13 billion and EPS of $1.20. On April 22, the company reaffirmed 2009 revenue guidance of $68 – $69 billion, but lowered their full year 2009 EPS guidance to $4.70 – $5.00.


We are anticipating another disappointing quarter from Boeing as the global economic recession continues to impact the company’s commercial aircraft segment. This will mark the fifth consecutive quarter that Boeing delivers quarterly results that are below Wall Street’s expectations.


Despite the choppy environment of the last 18 months, there still appears to be many challenges ahead for Boeing. The new 787 Dreamliner release continues to be pushed back. Meanwhile the commercial airline industry is likely facing further consolidation and even bankruptcies due to weak global demand. This could lead to further production cuts as overall capacity is reduced across the airline industry.


Share Performance

Since the beginning of the year, Boeing’s shares are down 4%. In 2008, BA’s shares fell 51% and underperformed the 34% decline in the Dow Jones industrial average.



Shares are now trading at 9x consensus 2010 EPS estimates. This is a discount to the relative valuations of their peer group. Boeing’s earnings are likely to decline in 2010 on falling demand which could put further downward pressure on their stock price.


Recommendation: Sell with a $35 price target.


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