Boeing (BA) Reports Staggering Q4 Loss

Component Dow The Boeing Company (BA) is trading down more than 3% in Wednesday’s premarket session after reporting a staggering loss of $15.25 per share in the fourth quarter of 2020, much worse than loss estimates of $1.63 . Revenue fell 14.6% year over year to $15.39 billion, matching modest expectations. The company cited COVID-19 and 787 production issues for the shortfall, but delivered more than 40 MAX-737 jetliners and returned five more to its fleets.

Key points to remember

  • Boeing reported a quarterly loss well above expectations of $15.25 per share.
  • The stock is trading below $200 for the first time since November.
  • The aerospace giant has pushed delivery dates to 2023 and beyond.
  • Delivery forecasts may be too optimistic due to huge supply issues.

Commercial airline revenue fell 37% year over year, up 31% from the third quarter. The 737-MAX program is expected to deliver 31 jetliners per month in 2022, when 787 production will drop to just five per month. The company pushed back 777 deliveries to the end of 2023, but all projections are suspect because Boeing has done a poor job of forecasting demand since the Ethiopian jetliner crashed in 2019.

The MAX-737 jetliner returned to the skies in the fourth quarter, but there is little demand for the aircraft, with severe travel restrictions around the world. Additionally, the pandemic has forced carriers to mothball hundreds of aircraft, generating massive supply that will reduce demand for new aircraft in the future. Adding to long-term concerns, many analysts now believe business travel will never return to pre-pandemic levels because companies have adapted to virtual meeting space, saving budgets billions. of travel.

Wall Street consensus on Boeing hasn’t improved over the past three months despite positive 737-MAX developments, with “Hold” rating based on 10 “Buy”, 1 “Overweight”, 11 “Hold” , 2 “Underweight” and 3 “Sell” recommendations. Price targets currently range from a low of $150 to a high of $306, while the stock will open Wednesday’s session nearly $30 below the midpoint target of $222. There is room for a small upside with this placement, but the huge quarterly loss will not pique buyer interest.

Point

Request is an economic principle referring to a consumer’s desire to purchase goods and services and their willingness to pay a price for a specific good or service. If all other factors are held constant, an increase in the price of a good or service decrease the quantity demanded, and vice versa. Market demand is the total quantity demanded by all consumers in a market for a given good.

Boeing weekly chart (2013-2021)

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The stock returned to the 2007 high at $107.83 in 2013 and broke out, entering a wide Trading range in addition to new Support. It held within those bounds until a secondary breakout in 2017, with committed buyers generating impressive returns all the way to the March 2019 all-time high at $446.01. A second MAX crash then triggered a global grounding, sending the price into a tailspin that initially found support near $320 in Q3.

Boeing broke range support in February 2020, plunging to a double-digit seven-year low, and rebounded above $200 in June. A period of several months consolidation dug a higher November low, giving a strong buying impulse that rose in the second quarter resistance before falling below 200 weeks exponential moving average (EMA) in December. The stock has since retreated and is trading below $200 for the first time since November.

The monthly stochastic oscillator is going through a buy cycle, while the weekly indicator’s sell cycle has moved into oversold territory. Overall, this slowdown is likely to bottom out quickly, allowing bottom fishermen to expose themselves to cheaper prices. Nevertheless, the month of November difference between $158 and $172 sits idle, potentially acting as a magnetic target as investors realize the old Boeing could be gone for good.

Point

A stochastic oscillator is a momentum indicator comparing a the last price of a security to a range of its prices over a certain period of time. The oscillator’s sensitivity to market movements can be reduced by adjusting this time frame or by taking a moving average of the result. It is used to generate overbought and oversold trading signals, using a limited range of values ​​from 0 to 100.

The essential

Boeing is selling off after posting a much worse-than-expected fourth-quarter loss and announcing delays to key dates.

Disclosure: The author held no positions in the aforementioned titles at the time of
publication.

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