Boeing 1Q Net Loss Narrows; 737 Max Deliveries Halted

Boeing’s (BA) 1Q net loss narrowed to $561 million from $641 million year-over-year. The plane manufacturer reported a 10% drop in net revenue to $15.2 billion compared to $16.91 billion reported a year ago. Boeing reported an adjusted net loss per share of $1.53 in 1Q versus $1.70 in 1Q 2020.

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Fewer 787 deliveries was the main driver behind the decline in revenue in the quarter, compounded by lower commercial service volumes. Commercial airplane revenue dropped to $4.3 billion. The revenue loss could have been much higher had the company not delivered more 737s, and supplemented by higher revenue from KC-46A tankers.

Amid the mixed financial results, Chief Executive Officer Dave Calhoun maintains that progress has been made in transforming the enterprise and strengthening safety processes. The executive expects 2021 to be an inflection year for the broader industry amid the roll-out of COVID-19 vaccines.

“Our balanced commercial, defense, space and services portfolio continues to provide critical stability for our business – and we remain focused on safety, quality and integrity as we deliver on our customer commitments,” said Mr. Calhoun.

In the latest development, the multi-national corporation has paused deliveries for the 737 Max airplanes. CNBC reports that Boeing was forced to halt deliveries on an electrical issue grounding more than 100 of the company’s planes worldwide early in the month. According to the CEO, a fix is likely to take just a few days per airplane.

Amid the grounding of the 737 Max, Boeing has confirmed the acquisition of five 777 Freighters by Silk Way West Airlines. The private cargo operator is to use the planes to expand its international network. (See Boeing stock analysis on TipRanks)

Cowen analyst Cai Rumohr reiterated a Hold rating on Boeing two days ago saying a messy 1Q included few negative surprises, however, he also feels that there is little to be optimistic about regarding Boeing’s recovery.

“Both 787 and MAX remain in a state of uncertainty given the combination of internal (787 fuselage joins, MAX electrical rework) and external (COVID-19; weak international travel) issues, likely limiting the upside of BA given its modest 3.6% yield on 2022 FCF,” Rumohr stated in his report.

The analyst has reiterated a $240 price target on the stock implying 2.85% upside potential to current levels.

Consensus among analysts on Wall Street is a Moderate Buy based on 8 Buy and 4 Hold ratings. The average analyst price target of $277.92 implies 19% upside potential to current levels.

Boeing scores 3 out of 10 on TipRanks’ Smart Score rating system, suggesting it is likely to underperform market expectations.