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2 days ago
RBC cuts Boeing's PT on expectations for fewer 2024, 2025 737 MAX deliveries
By: Reuters | April 16, 2024
** RBC Capital Markets cuts PT on Boeing BA on expectations for fewer 737 MAX deliveries in 2024, 2025
** Stock edged up 0.11% at $167.93 in premarket trade
** Cuts PT by $10 to $215, expects Boeing to remain at a low production rate on the MAX for much of 2024
** Also expects co to eventually acquire Spirit AeroSystems SPR, but adds co's execution on expected rate increases would require substantial investments
** "We do not believe BA has the financial flexibility to launch this (new narrrowbody jet) in the near-term, but its share position in the important narrowbody market will likely necessitate some action here" - Brokerage
** Median PT on the stock is $240, as per LSEG data
** YTD, BA down ~36%
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7 days ago
Bear of the Day: Boeing (BA)
By: Zacks Investment Research | April 12, 2024
Boeing (BA) has been the premier manufacturer of commercial jetliners for decades. The company’s premier jet aircraft, along with varied defense products, positions it as one of the largest defense contractors in the United States.
Analysts have taken their earnings expectations lower across the board, landing the stock into a Zacks Rank #5 (Strong Sell).
Image Source: Zacks Investment Research
Let’s take a closer look at how the company currently stacks up.
Boeing
Shares have faced turbulence year-to-date, down 33% and representing one of the worst-performing S&P 500 stocks in 2024. Operational issues have become a significant thorn in the company's side, souring investors’ opinions overall.
Image Source: Zacks Investment Research
Analysts have fully noted the issues, reflected in their negative revisions. The safety issues are undoubtedly expected to impact the company significantly, and the FAA has stated it won’t allow Boeing to ramp up production for any of its Max family of aircraft.
Mike Whitaker, FAA Administrator, said, “This won’t be back to business as usual for Boeing. We will not agree to any request from Boeing for an expansion in production or approve additional production lines for the 737 MAX until we are satisfied that the quality control issues uncovered during this process are resolved.”
We’ll undoubtedly hear more about the situation during the company’s next quarterly release, expected on April 24th. Revenue revisions for the quarter-to-be-reported have similarly been slashed, with the $18.9 billion Zacks Consensus Sales estimate down 8.2% since mid-January.
Image Source: Zacks Investment Research
Bottom Line
Analysts' negative earnings estimate revisions, resulting from operational issues, paint a challenging picture for the company’s shares in the near term.
Boeing (BA) is a Zacks Rank #5 (Strong Sell), indicating that analysts have taken a bearish stance on the company’s earnings outlook.
For those seeking strong stocks, a great idea would be to focus on stocks carrying a Zacks Rank #1 (Strong Buy) or a Zacks Rank #2 (Buy). These stocks sport a notably stronger earnings outlook and the potential to deliver explosive gains in the near term.
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1 week ago
Boeing won’t even consider moving HQ back to Seattle
By: CNN | April 11, 2024
It’s been a brutal six years for Boeing, with two fatal jet crashes kicking off a series of safety crises — and raising concerns about the quality and safety of the planes rolling off its assembly lines.
As Boeing scrambles to repair its reputation, some critics and shareholders are asking: Why not move headquarters away from the shadow of Washington, D.C., and back home to its roots in Seattle?
But Boeing has now made clear: We are not interested.
An individual Boeing stockholder, Walter Ryan, wanted to put the question of a move up for a vote during the company’s May 17 annual shareholder meeting. He filed his proposal in October for the shareholder vote, which would have been non-binding — but in February, Boeing went to the Securities and Exchange Commission, ultimately winning approval to block the vote.
Ryan, who owns 10,000 shares of Boeing stock, lives in Las Vegas and has never been to Seattle. But he believes that if Boeing is to fix its current quality and safety problems, the company’s top management should be back in Seattle — near where most of its commercial aircraft are still manufactured.
“I think they need some hands-on overseeing, and by som ebody who has skin in the game,” Ryan told CNN.
Boeing’s corporate offices had been in Seattle from its founding in 1916 until it relocated to Chicago in 2001. Then in 2022, Boeing corporate moved again — this time to Arlington, Virginia, near the Pentagon and across the river from Capitol Hill. Most manufacturing, however, remains more than 2,300 miles away in Seattle.
“They want to be next to government,” Ryan said. “Is that a sound idea? I don’t think so.”
It isn’t only shareholders like Ryan who believe a return to Seattle would benefit Boeing.
“Part of it would be symbolic,” said Shem Malmquist, a Boeing 777 pilot and instructor of aviation safety at Florida Tech. “But it’s also going to be better culturally. In the end, the closer the top management is to the production and what’s going on and the engineers, the better.”
Boeing’s response
In his proposal he wanted presented to shareholders, Ryan said the corporate move from Seattle and separation from the core manufacturing business resulted in major issues related to “engineering and quality problems, and Boeing’s historic credibility,” — concerns he said are now foremost “in the minds of both travelers and shareholders.”
Ryan wrote the proposal even before a headline-grabbing incident in January, when the door panel of a Boeing 737 Max blew off in the middle of an Alaska Airlines flight, later found to be because the aircraft left the factory missing crucial bolts needed to keep it in place.
Boeing’s attorneys argued to the SEC that this isn’t an appropriate issue for shareholder vote: “The proposal seeks to ‘micro-manage’ the company by probing too deeply into matters of a complex nature upon which shareholders, as a group, would not be in a position to make an informed judgment.”
Further, Boeing’s attorneys dismissed the premise of Ryan’s argument, calling it “an unsupported theory that certain manufacturing issues experienced by Boeing would have been avoided simply because the company’s headquarters were located in a particular city, emphasizing, among other things, management’s ability to walk the factory floor.”
The SEC agreed that Boeing it did not need to put Ryan’s proposal on its proxy statement, which was released Friday. Boeing told CNN it did not have any comment beyond those included in its filing to the agency.
Ryan said he believes his proposal — which would have allowed shareholders only to “recommend” a move back to Seattle, not mandate it — would have won had it been put up for a vote.
“That’s why I sent it in. I thought it would pass, and thought it would be a good idea,” he told CNN.
Speaking broadly, however, even shareholder proposals that are put to a vote are not likely to pass — especially recently.
According to Institutional Shareholder Services, which tracks shareholder votes, only 5.4% of votes held in 2023 on shareholder proposals received majority support. That’s down sharply from 12.6% in 2022, and 19.5% in 2021.
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1 week ago
Boeing (BA) Stock Falls After Another In-Flight Issue, Bear Note
By: Schaeffer's Investment Research | April 8, 2024
• A Boeing 737-800 engine cover flew off during a Southwest Airlines flight
• Bernstein lowered its price objective to $240 from $272
Boeing Co (NYSE:BA) is in the spotlight yet again, after news that the Federal Aviation Administration (FAA) is investigating an incident in which a Boeing 737-800 engine cover flew off during a Southwest Airlines (LUV) flight and hit the aircraft's wing flap on Sunday. Additionally, CEO David Calhoun reportedly earned a 45% raise to $33 million last year.
The equity also attracted a price-target cut from Bernstein to $240 from $272. The analyst in question said the equity is in a "purgatory situation" amid recent issues. Brokerages are still bullish, however, with 15 of the 21 firms in coverage calling the stock a "buy" or better, while the 12-month consensus target price of $244.80 is a 33.7% premium to current levels.
The shares were last seen down 0.2% to trade at $182.73. The 20-day moving average is acting as pressure, but a new floor has also emerged at the $180 level. BA is down 29.4% in 2024.
While calls outpace puts on an absolute basis, Boeing stock's 50-day put/call volume ratio over at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands higher than 98% of annual readings. This means puts have been getting picked up at a quicker-than-usual clip lately.
What's more, the equity's Schaeffer's Volatility Scorecard (SVS) sits at a high 98 out of 100. This means BA exceeded option traders' volatility expectations in the past 12 months.
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2 weeks ago
Southwest flight from Denver makes emergency landing after 'mechanical issue,' airline says
By: ABC News | April 7, 2024
A Southwest Airlines flight had to make an emergency landing Sunday morning after the engine cover detached during takeoff, according to the Federal Aviation Administration.
The Boeing 737-800 aircraft, which had been scheduled to fly from Denver to Houston, landed safely back at Denver International Airport just after 8:00 a.m. and was towed to the gate, according to the airport and airline.
According to the FAA, which is now investigating the incident, crew members aboard the flight said "the engine cowling fell off during takeoff and struck the wing flap."
In a statement, Southwest Airlines said the flight "landed safely after experiencing a mechanical issue." Customers were rebooked on other flights, and maintenance teams are now inspecting the plane, the airline said.
Footage taken by some passengers showed what appeared to be part of the plane hanging off and flapping in the breeze.
"It all blew away," one person can be heard saying in a video taken by passenger Lisa C., after which several people on board can be heard breaking out in cheers as the plane touches back down.
The engine cowling "peeled off within the first 10 minutes" of the flight, Lisa C. told ABC News.
"We all felt kind of a bump, a jolt, and I looked out the window because I love window seats, and there it was," she said.
Another passenger, Cooper Glass, told ABC News the experience was "frightening."
"People in the exit row across from me started yelling up to the flight attendants and showed them the damage," Glass said.
Glass praised the pilot, whom he said "did a great job on landing."
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2 weeks ago
Boeing MAX Production Is at a Crawl. It Would Take 20 Years to Fill the Backlog at This Rate
By: Barron's | April 5, 2024
Boeing's 737 MAX production has slowed to a crawl. That's probably a good thing though airline customers might not agree. Boeing suppliers, on the other hand, should be all right — if Boeing can get its act together.
Boeing's targeted and Federal Aviation Administration-permitted MAX production rate is currently 38 a month. The company delivered 42 MAX jets in January and February. Boeing will report March deliveries in a few days. Investors shouldn't expect a big number.
"Cirium data shows that Boeing only test flew 13 MAX planes in March, similar to the 11 that it flew in February," wrote Vertical Research Partners analyst Rob Stallard in a report Thursday. Cirium is an aviation consultancy used by the industry and Wall Street.
All signs point to another month of around 20 MAX deliveries. Along with new production, Boeing is still delivering MAX jets built and parked during the worldwide MAX grounding between March 2019 and November 2020 following two deadly crashes within five months.
Melius analyst Robert Spingarn believes the first-quarter production rate will end up lower than 20 per month. There is a good reason for lower production. Boeing is working "to minimize traveled work," wrote the analyst in a report Friday.
Traveled work refers to doing jobs on the production line somewhere other than originally designed. Less travel work is a sign Boeing is trying to get its production system under better control. That change came in the aftermath of the early January emergency door plug blowout on a 737 MAX 9 operated by Alaska Air.
More control and better quality is a positive, but it does put short-term and long-term estimates at risk. Wall Street expects Boeing to deliver about 450 MAX jets in 2024, up from 387 delivered in 2023. In the long term, Boeing expects to produce 50 MAX jets a month. "Given the current state of the 737 ramp, Boeing's targeted rate of 50/month in 2025/2026 seems unlikely," added Spingarn.
Boeing has some 4,800 unfilled orders for 737 MAX jets. At 20 a month, that's 20 years of backlog. It's great to have a big backlog but Boeing's airline customers would balk. Things should improve, still, at 40 a month Boeing has 10 years of backlog and some airlines would be waiting longer than expected for new jets.
That has some implications for Boeing as well as the airlines. Jefferies analyst Sheila Kahyaoglu noted in a report that Boeing paid Alaska $160 million in compensation for the MAX 9 grounding and lost airline capacity. Extrapolating that payment to other airlines lacking MAX capacity is difficult — only one door plug blew off — but she expects Boeing to report more than $420 million payments to airlines for the first quarter. Boeing "expects additional compensation to be provided beyond Q1, the terms of which are confidential," added the analyst.
The production delays make life harder for the airlines and Boeing. There will eventually be an impact on suppliers too. Spirit AeroSystems and Hexcel are two at the biggest risk of estimate cuts, Kahyaoglu wrote. Both companies' estimates imply production rates closer to 38 a month; she now expects an average of about 30 MAX jets made a month in 2024.
Boeing can still take parts at a higher rate than it is making planes, but investors should, at least, be aware of the potential for cuts given how the year has started.
At 30 a month, it would take Boeing some 13 years to work through its existing MAX backlog. Production rates shouldn't stay at that level forever. Still, the entire aerospace value chain — from suppliers to airlines — is waiting for things to improve.
Boeing stock was up 0.4% in premarket trading Friday, while S&P 500 and Dow Jones Industrial Average futures rose 0.4% and 0.5%, respectively.
Coming into Friday trading, Boeing stock has fallen about 30% this year. MAX troubles have weighed on investor sentiment.
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2 weeks ago
Boeing Secures 5-Year Extension to Manage US Air Force Testing Facility in Utah
By: MT Newswires | April 2, 2024
Boeing BA secured a five-year extension to its operation and maintenance contract, worth up to $559 million, for the Little Mountain Test Facility at Hill Air Force Base, Utah, by the US Air Force.
The site tests the functionality of critical defense systems, including intercontinental ballistic missile force and nuclear modernization programs, among other projects.
Boeing has managed the facility for 50 years, the company said Tuesday.
Boeing shares were down about 1% in recent trading.
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3 weeks ago
$BA made a higher low on the weekly, if you think the uptrend will hold, you could long here with a stop under the last higher low, targeting a gap fill at the least
By: TrendSpider | March 29, 2024
• Trade idea using asymmetric reward-to-risk:
$BA made a higher low on the weekly, if you think the uptrend will hold, you could long here with a stop under the last higher low, targeting a gap fill at the least.
R/R ratio: 2.78
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gfp927z
3 weeks ago
Bar, I wouldn't buy the stocks either, but it's an interesting technology to follow. The proposed business model - VTOL 'taxi service', I don't see being very viable if you can only carry a handful of passengers at a time. They also have to periodically recharge the electric batteries, so lots of downtime, and the cost of these aircraft will be steep. Business-wise, better off just buying a fleet of yellow cabs. But the technology is super cool, so that's the attraction :o)
The 'redundancy' aspect of having so many engines is a huge safety plus, and the lack of vibration eliminates one of the biggest problems with helicopters. My dad was a pilot and an aeronautical engineer, and in the 1980s did some modification work on helicopters. He said he would absolutely never get in one. But these new electric VTOLs eliminate some of the biggest problems.
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4 weeks ago
FBI tells Alaska Airlines passengers they may be ‘victim of a crime’
By: CNN news | March 22, 2024
Passengers on board the Alaska Airlines Boeing 737 Max 9 that suffered a terrifying midair blowout in January have received a letter from the FBI saying they may be victims “of a crime.”
Attorney Mark Lindquist, who represents multiple passengers that were on Alaska Airlines flight 1282, shared with CNN the letter that the FBI office in Seattle sent to passengers on Tuesday.
“I’m contacting you because we have identified you as a possible victim of a crime,” the letter reads in part. It also notes that the FBI is currently investigating the case.
“My clients and I welcome the DOJ investigation,” Lindquist told CNN, “We want accountability. We want answers. We want safer Boeing planes. And a DOJ investigation helps advance our goals.”
Attorney Robert Clifford, who represents many family members of the 2019 crash victims of a Boeing 737 Max jet flown by Ethiopian Air as well as some of the recent Alaska Air passengers, said some of his clients on Alaska Air also got the letter notifying them that they could be crime victims.
“I’m certain everyone on the plane will be getting this letter,” he told CNN. “The families of the Ethiopian Air victims should have also been considered crime victims.”
In addition to the letters that went out to passengers, flight attendants aboard Alaska Air Flight 1282 have been interviewed by investigators from the Justice Department, according to people familiar with the situation.
The letters were first reported by the Wall Street Journal earlier this month.
“The FBI does not confirm or deny the existence of an investigation,” FBI Seattle’s Public Affairs Office wrote in an email to CNN, citing Department of Justice policy.
Boeing’s potential criminal liability
But Justice opened a probe into the incident and Boeing in February, CNN has previously reported. That investigation carries the potential to upend a controversial deferred prosecution agreement that Boeing reached with the Justice Department in the final month of the Trump administration.
Tha settlement, which was criticized by families of crash victims and members of Congress, was over charges that Boeing defrauded the Federal Aviation Administration during the original certification process for the 737 Max jets. Boeing agreed to pay $2.5 billion as part of that settlement, but most of that was money Boeing had already agreed to pay to the airlines that had purchased the Max jets grounded for 20 months following the Ethiopian Air crash and an earlier crash in Indonesia.
The deferred prosecution agreement could have ended the threat of Boeing facing criminal liability for those earlier fraud charges. But the Alaska Air incident came just days before a three-year probation-like period was due to end, so the criminal probe could expose Boeing to charges not just for the Alaska Air incident but also the earlier allegations of criminal wrongdoing.
Boeing declined to comment.
On January 5, 171 passengers and six crew members boarded the flight in Portland, Oregon, bound for Ontario, California. Abruptly after take off, a panel of the fuselage called the “door plug” blew off, forcing the pilots to make an emergency landing.
A preliminary investigation by the National Transportation Safety Board found that the jet, which was delivered to Alaska by Boeing in October, had left Boeing’s factory without the four bolts needed to keep the door plug in place.
While the NTSB has yet to assess blame for the missing bolts, it has criticized Boeing for not having the documentation available showing who worked on the door plug when the plane was at Boeing’s factory.
The FAA has also found multiple problems with production practices of both Boeing and its major supplier Spirit AeroSystems following a six-week audit of Boeing triggered by the January 5 door plug blowout.
Subpoenas from the Justice Department were also recently sent seeking documents and information that may be related to Boeing and Spirit AeroSystems and mentions the “door plug” that is used in the Boeing 737 Max 9s, according to a report from Bloomberg.
Boeing CEO Dave Calhoun told investors last month that “We caused the problem, and we understand that. Whatever conclusions are reached, Boeing is accountable for what happened.”
The development comes the same week Boeing said it will report massive losses in the first quarter stemming from the Alaska Airlines incident.
The losses will be in part because of compensation to airlines that owned the Max 9, which was grounded for three weeks after the incident. Alaska Air CEO Ben Minicucci told investors last month that the incident cost his airline about $150 million, and that it expected to be compensated for those losses by Boeing.
The other contributors to losses will be “all the things we’re doing around the factory,” Chief Financial Officer Brian West said on Wednesday, leading to slower production at its 737 Max plant in Renton Washington.
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