Boeing reaffirmed full-year cash flow guidance early Wednesday after beating earnings estimates for the second quarter as jet deliveries picked up. Boeing stock jumped to clear a buy point while hitting a 52-week high.
The Dow Jones aviation and defense giant reported improving jet production after a workers' strike in late June at key supplier Spirit AeroSystems. Boeing also reaffirmed key output targets, setting Wall Street at ease. European rival Airbus on Wednesday reported better-than-expected underlying operating profit for Q2.
Boeing Earnings
Estimates: Analysts expected Boeing to widen losses to 89 cents per share from 37 cents a year ago, FactSet shows. Revenue is seen rebounding 11.5%, year over year, to $18.592 billion.
Results: Boeing lost 82 cents per share, less than feared. Revenue rose 18% to $19.75 billion, also ahead of views.
The plane maker's commercial segment posted a 41% jump in Q2 revenue, driven by higher 787 jet deliveries. Its defense, space and security segment reported basically flat revenue and negative margins, "primarily driven by losses on certain fixed-price development programs, as well as continued operational impacts of labor instability and supply chain disruption on other programs."
Boeing generated $2.6 billion of free cash flow in Q2, also ahead of forecasts.
"We are well positioned to meet the operational and financial goals we set for this year and for the long term," said Dave Calhoun, Boeing president and chief executive officer, in an earnings release Wednesday.
"With demand strong, we're steadily increasing our production rates across key programs," he added.
Outlook: The company maintained its free cash flow guidance of $3 billion-$5 billion for the full year. For Boeing, the pace of aircraft deliveries is key to its cash flow target. That is because customers make the bulk of payments upon delivery.
Prior to Q2 results, Wall Street saw Boeing losses continuing through the current third quarter followed by a return to profits in Q4. For the full year, analysts expected Boeing to lose $1.29 per share, a sharp improvement from an $11.06 loss in 2022.
Boeing Stock, Aerospace Stocks
Shares of Boeing leapt up 8.8% to 232.89 Wednesday, after closing down 0.8% in Tuesday's stock market action. Boeing stock topped a 223.91 buy point from a flat base that formed largely above the 50-day moving average, the IBD MarketSmith chart shows. BA stock has been trading in a narrow range since mid-February, following a strong rally starting last October. It pegged a 52-week high of 2333.08 in Wednesday's intraday action.
Airbus stock advanced 1.3% Wednesday. Shares had slid 2% Tuesday after Raytheon Technologies on Tuesday reported new problems with a geared turbo fan engine model, which powers certain Airbus jets.
General Electric, another key jet-engine supplier, gave an upbeat outlook Tuesday and reported momentum on Leap engine sales.
Boeing stock led the advance of the Dow Jones Industrial Average on Wednesday. The blue chip stock index scored its 13th straight day of gains.
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Dow Giant Updates On 737, 787 Jets
On Wednesday, Boeing stuck to its prior target of producing 38 737 Max aircraft per month later this year, up from 31 a month. It's now targeting output of 50 737s per month in the 2025/26 time frame.
The Dow Jones giant still plans to raise production of the 787 Dreamliner to five planes a month later this year, from four per month currently. It plans to produce 10 Dreamliners per month by 2025/26.
In 2023, Boeing still expects to deliver 400-450 737 Max jets and up to 80 Dreamliners.
Ahead of Q2 results, analysts at Bank of America were worried about the impact of the recent strike by union workers at supplier Spirit AeroSystems on Boeing's production targets.
"We maintain that the pause could impact 737 Max production, profitability and result in a SPR charge related to the strike and its resolution," BofA analyst Ronald Epstein wrote in a July 12 note to clients.
Seeing Momentum But Issues Remain
Commercial aviation continues to recover after the Covid-19 pandemic, with a further boost from China's reopening this year. Plane makers are trying to ramp up production after struggling to meet robust jet demand from airline customers.
Boeing had already reported delivering 266 aircraft in the first six months of 2023 vs. 316 deliveries for Airbus. The Dow giant also reported swelling aircraft orders.
In Q2, Boeing managed to deliver 136 aircraft, a 5% increase from the prior quarter. That included 60 deliveries in June, the most since March, amid the job action at Spirit AeroSystems.
Spirit reports Aug. 2 before the market open. The aerospace supplier reportedly makes the entire body of Boeing's bestselling 737 Max jet.
Spirit also makes fuselages and pylons for Boeing and Airbus, but it has been the source of many issues.
Year to date, Boeing stock is now up 22.2%, including a 14.7% gain in the past three months.
