Boeing Co. (NYSE:BA) shares dropped 8% on Monday and are now down more than 52% in the past year ahead of what will likely be another lackluster monthly delivery number expected out on Tuesday, June 14.
More Problems For Boeing: There is very little chance Boeing will report a strong May delivery number given the company was forced to pause 737 MAX production for 10 days due to supply chain disruptions, according to Bank of America analyst Ronald Epstein. Delivery of 737 MAX planes in inventory has taken longer than anticipated. Boeing had around 330 aircraft in inventory as of mid-May, but Epstein said it has taken about two months to prepare each aircraft for delivery. To make matters worse, about half of Boeing's MAX inventory is due to Chinese Airlines, and challenges on China's air traffic market could put those deliveries at risk.
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Boeing had previously targeted 500 deliveries in 2022, but it appears to be falling well below that pace. Boeing reported 35 jet deliveries in April and 130 planes through the first four months of the year. Analysts expected about 140 jet deliveries in the second quarter, meaning Boeing would need to average at least 52 monthly deliveries in May and June to meet initial expectations.
Full-Year Target In Doubt: It's unlikely that Boeing will hit its full-year target, Epstein said.
"In fact, if we look at delivery numbers through May (est) and assume that BA had needed to deliver ~42 aircraft a month to achieve the 500 target, then for the rest of the year BA needs to deliver 52 MAX/month," he added.
Bank of America has a Neutral rating and $150 price target for BA stock.
Benzinga's Take: For years, Boeing has asked its investors to be patient while it gets its business on track. Those investors have been rewarded with more problems, delays and share price underperformance. At some point, Boeing could make for a compelling turnaround story with significant potential valuation upside. However, at this point, Boeing remains a show-me story.
