Why Boeing Stock Is Down By 3% Today

Boeing Stock Falls As Company Cuts Guidance For 787s Deliveries

Shares of Boeing found themselves under pressure after FAA stated that new problems were found near the nose of certain 787 planes that were produced but not delivered.

Boeing stated that “the company has identified additional rework that will be required on undelivered 787s”. As a result, the 787 production rate will decrease and the company expects to deliver fewer than half of the 787s that are currently in inventory.

In the second quarter, Boeing’s major program deliveries totaled 79 in the Commercial Airplanes segment and 43 in the Defense, Space & Security segment. The company has also received 219 gross orders in June, which indicated that demand for Boeing’s products remained very strong.

What’s Next For Boeing Stock?

Analysts expect that Boeing will report a loss of $1.37 per share in 2021, but the company is expected to return to profitability in 2022 with earnings of $5.46 per share.

Analyst esimtates for 2022 earnings have been moving higher in recent weeks. However, higher earnings estimates failed to provide support to the stock as investors focused on Boeing’s problems.

The stock is trading at 42 forward P/E which is high for Boeing but investors are ready to look beyond 2022 as the industry continues to recover despite persistent problems with coronavirus in the world.

I’d note that recent safety concerns, highlighted by FAA, have clearly hurt market sentiment towards Boeing stock. S&P 500 is at all time high levels while shares of Boeing have pulled back by almost 20% from highs that were reached back in March.

The near-term trend for the stock is bearish, and it looks that Boeing will need to come up with additional upside catalysts to reverse this trend. While Boeing’s recent success in booking new business will provide support to its financials in the future, the company needs to fix the existing problems for its stock to have a chance to develop significant upside momentum.

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