Boeing reported bleak first-quarter results Wednesday morning, but easily topped estimates. Shares of the Dow Jones aerospace giant gained altitude early, but got knocked to a new 17-month low.
Selling took hold shortly after the 10:30 a.m. earnings call started, as it became clear that production ramps will take time.
Boeing CEO Calhoun said 737 production will be "slow and lumpy" in Q2 as it works through challenges over the next 60 days. "We are not going to rush it."
CFO Brian West said Boeing is slowing near-term production of the 787 Dreamliner and plans to "return to five per month later this year."
Last week, Northcoast Research cut its rating for BA stock to sell from neutral with a 140 price target. Northcoast said its channel checks point to a build rate of two 787 Dreamliner jets per month, compared with Boeing's claim of five. "That would normally indicate some type of problem" not yet shared with Wall Street, according to Northcoast.
Still, the company said its backlog rose to nearly $529 billion from $520 billion. That includes more than 5,600 commercial airplanes.
Going into Q1 earnings, the consensus was for a much brighter outlook, with estimates showing that Boeing will reverse the current surge of red ink, turning profitable by Q3.
CEO Calhoun, is set to depart at the end of 2024. In the call, he indicated support for "an internal candidate that I think the world of" as his replacement. But he said he doesn't expect his replacement will be announced in the next month or two.
Boeing Earnings
Estimates: FactSet expected Boeing to report a Q1 adjusted loss of $1.63 per share, widening from the loss of $1.27 per share last year. Analysts predicted revenue would fall 9.4% to $16.24 billion.
Results: Boeing reported a loss of $1.13 per share, as revenue fell 8% to $16.57 billion.
Boeing Stock
Boeing stock climbed about 5% early, but closed down 2.9% at 164.33 in Wednesday stock market action.
However the aerospace and defense industry group has stocks worth keeping an eye on. Aerospace contractor TransDigm Group was IBD Stock Of The Day on Tuesday. Howmet Aerospace is on the watchlist for the IBD Leaderboard portfolio of elite stocks. Aerospace names on the flagship IBD 50 list of leading growth stocks include FTAI Aviation and Aerovironment.
Be sure to read IBD's The Big Picture column after each trading day to get the latest on the prevailing stock market trend and what it means for your trading decisions.
