Boeing: Better-Than-Expected Earnings... But Still a Long Way to Go Down

Boeing (BA) delivered their quarterly earnings report to the market this morning ahead of the open.  The report showed better than expected earnings per share (EPS) with a loss of $1.13. CNBC tagged the results best by saying “better-than-feared,” which is the exact sentiment on Wall Street today.

The report highlighted the effect of January’s Alaska Airlines door accident as the slowdown in deliveries caused the company to burn through more than $3.9 billion.

Once again, The Street expected worse with a number above $4 billion.

Mum is the word from the analyst community so far as there have been changes to analyst’s recommendations or target prices in the last week.

One reason is that Boeing’s management hasn’t given them anything to go on. Historically, the company provides full year operating cash flow and free cash flow guidance.analyst recommendations for boeing company

The company hasn’t done that for the last two quarters as production delays and their order book are still reeling from recent manufacturing problems and events.

For what it’s worth, Wall Street still considers Boeing stock a strong buy.

We’ve seen a number of analysts lower their recommendations in the last four months, but very few consider the stock a “sell.” It’s nice to be one of the companies in a duopoly.

With a lack of fundamental guidance available, the market will turn to the only thing that it can to gauge buying and selling opportunities: The stock’s price and trends.

Boeing stock has been consolidating at $170 for the last two weeks. The consolidation came after the stock reached an oversold reading from its relative strength index (RSI). The same situation provided short-term support for Tesla (TSLA) shares ahead of their earnings report last night.

In Boeing’s case, the report lacked any positive news, putting the $170 level at risk of breaking. This morning’s rally was quickly rejected by the stock’s bearishly biased 20-day moving average, returning it to $170.

For the short-term, we’re likely to see slow movement below that support with a likelihood that the stock will begin a slow trend to $150 over the next four to six weeks.

I expect the market to begin adding to positions at $150 barring any additional events or accidents.  Ultimately, the market will consider $120 an attractive long-term buying price as this has captured the technical bottoms for the stock in the post-pandemic period.

ba stock chart

Bottom Line

This stock is in a long-term bearish trend that is not likely to reverse over the next three to six months.

The long process of allegations and investigations will maintain a cautious outlook on shares which should maintain a degree of pressure on any short-term rallies.

Boeing is neither a buy or a short right now. The stock’s decline is not likely to be rapid enough to make a short position worthwhile, but still has another 10-25% downside before a true long-term buying opportunity will present itself.

About the Author

Chris Johnson (“CJ”), a seasoned equity and options analyst with nearly 30 years of experience, is celebrated for his quantitative expertise in quantifying investors’ sentiment to navigate Wall Street with a deeply rooted technical and contrarian trading style.

Read full bio