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Boeing stocks are skyrocketing after surprising profits. This is what’s behind that shocking beat. ‘

Boeing 737 MAX10 airliner.

Ellen Banner-Pool / Getty Images

Commercial aerospace giant
Boeing
Reported a surprising profit for the second quarter of 2021. So far, stock prices are rising.

Boeing (ticker: BA) report Profit of 40 cents per share from $ 17 billion in sales.Wall Street looking for Loss of $ 16.6 billion to 83 cents in sales. According to FactSet, no analyst predicted quarterly profits. That’s an amazing result. This is Boeing’s positive profit per share since the third quarter of 2019.

Trading on Wednesday is about an hour left and stocks are up 4.8%.
S & P 500
0.2% increase,
Dow Jones Industrial Average
It decreased by 0.1%.

Baird Analyst Peter Aerts Wednesday’s report calls this a “shocking beat.” For him, this report is good news for equities, and Arment believes investors will focus on improving their free cash flow outlook. Boeing ran out of about $ 700 million in cash this quarter. That’s well below Wall Street’s forecast of $ 2.8 billion. In addition, cashburn in the second quarter was about $ 3 billion better than in the first quarter of 2021.

Arment is Boeing’s bullish and will buy shares at a target price of $ 306.

Vertical Research Partners Analyst Rob StarardHowever, it’s not very bullish. He values ​​the stock hold and has a $ 242 price target for Boeing stock. Starard called the quarter a “Boeing tactical victory,” but strategic challenges remain. He noted in a Wednesday report that the commercial aviation sector is still losing money and Boeing needs to make many decisions in the coming quarter.For example, Boeing needs to decide whether to develop a new single-aisle jet to compete.
Airbus
Replace the A220, 737 MAX or the 757 program. There are several directions the company can take. New planes can cost up to $ 15 billion over a decade.

At the company’s conference call, which began at 10:30 EST, CEO Dave Calhoun did not respond directly to the new aircraft, but covered some of the requirements for the new jet. The next plane “will not change dramatically, with one exception, and that’s all sustainability,” Calhorn said. “”[It] You need to pass some serious sustainability tests. ”

The entire industry including engine manufacturers such as
General Electric
(GE) and
saffron
(SAF.France) and Boeing are focused on reducing carbon dioxide emissions from commercial aviation. This includes not only hybrid engine technology, but also Sustainable jet fuel Made from renewable resources.

Strategic decisions are imminent that could weigh on investor sentiment, including Boeing’s grounding and recertification of the Covid-19, 737 MAX, and quality issues with the 787, which stopped delivery of these jets. Considering the issues we have addressed, this quarter is a good result. ..

“We will continue to make significant progress in the second quarter, promoting overall stability and transforming our business for the future,” Calhorn said in a news release from the company. “While our commercial market environment is improving, we carefully monitor COVID-19 case rates, vaccine distribution and world trade as important indicators of industry stability.”

The rate of return improved compared to the first quarter. In commercial aerospace, Boeing delivered 79 aircraft in the second quarter, compared to 77 in the first quarter. Two more. However, operating losses were reduced from $ 856 million in the first quarter to $ 472 million in the second quarter.

The profit margin of the defense sector went from 5.6% to 13.9%. The service sector margin went from 11.9% to 13.1%.

It all represents progress in Boeing’s turnaround in recent results.

Write to Alroot with allen.root@dowjones.com

Boeing stocks are skyrocketing after surprising profits. This is what’s behind that shocking beat. ‘

Source link Boeing stocks are skyrocketing after surprising profits. This is what’s behind that shocking beat. ‘

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