The stock is yet to recover from the selloff that followed the Ethiopian Airlines crash and is losing ahead of the earnings report even as the production of 737 is being slashed. The current trend signals another selloff after the first-quarter report as the uncertainty surrounding 737 makes it risky for investors to hold on to Boeing. A potential downgrade of full-year guidance, triggered by the 737 crisis, might drag the stock further down.
The stock is yet to recover from the selloff that followed the Ethiopian Airlines crash and is losing ahead of the earnings report
Despite the ongoing efforts to revive the 737 Max and prove its airworthiness, the future of the fleet hangs in the balance due to the stringent flight tests it needs to pass. Moreover, the risk of customers demanding compensation for the delivery stoppage looms large over the company. Adding to Boeing’s woes, rival aircraft maker Airbus is cashing in on the current setback, and recently secured contracts worth $35 billion from various Chinese companies.
During the three months ended December 2018, strong deliveries pushed up Boeing’s revenues to about $28 billion, with all the three business segments registering double-digit growth. Earnings climbed 8% to $5.48 per share during the quarter, which ended with a year-over-year increase in backlogs.
Lockheed Martin, which competes with Boeing in the defense and space segment, is scheduled to publish earnings for the first quarter on Tuesday before the opening bell.
Boeing’s shares hit an all-time high in February when solid demand and production growth lifted market sentiment. However, they pared most of the gains in the following weeks and maintained the downtrend since then. The stock has gained 17% so far this year.