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What's Next For Boeing Stock After An Optimistic Production Outlook?
BABoeing(BA) Forbes·2025-01-29 14:28

Core Viewpoint - Boeing reported Q4 results that missed street estimates, with revenue of 15.2billionandanadjustedlossof15.2 billion and an adjusted loss of 5.90 per share, compared to expectations of 16.2billioninsalesanda16.2 billion in sales and a 3.00 loss per share [1][3] Financial Performance - Q4 revenue of 15.2billionrepresenteda3115.2 billion represented a 31% year-over-year decline [3] - The company delivered 57 airplanes in Q4, reflecting a 64% year-over-year decline due to a strike at its production unit [3] - Revenue from the commercial airplanes segment declined 55% year-over-year, while defense, space, and security revenue decreased by 20%, and global services sales increased by 6% [3] - Operating margin plummeted to -26.5% in Q4, down from 0.4% in the prior-year quarter [3] - The adjusted loss per share was (5.90), compared to (0.47)pershareintheprior−yearquarter[3]ProductionOutlook−DespitethedisappointingQ4results,managementexpressedoptimismforthesecondhalfoftheyear,havingfinalizedanagreementwiththeInternationalAssociationofMachinistsandAerospaceWorkersandresumedproduction[4]−TheFAAhascappedproductionat38unitspermonth,butBoeingisworkingtoliftthiscap,withpositiveresultsfromarecentsafetymanagementsystemassessment[4]−Boeingexpectstoreachtheproductiontargetof38aircraftpermonthlaterthisyear,whichissoonerthanpreviouslyanticipated[4]StockPerformance−BAstockhasunderperformedsignificantly,witha−32(0.47) per share in the prior-year quarter [3] Production Outlook - Despite the disappointing Q4 results, management expressed optimism for the second half of the year, having finalized an agreement with the International Association of Machinists and Aerospace Workers and resumed production [4] - The FAA has capped production at 38 units per month, but Boeing is working to lift this cap, with positive results from a recent safety management system assessment [4] - Boeing expects to reach the production target of 38 aircraft per month later this year, which is sooner than previously anticipated [4] Stock Performance - BA stock has underperformed significantly, with a -32% return since the beginning of 2024, compared to a 27% increase in the S&P 500 [2] - The stock price has dropped from over 260 in late 2023 to under 180currently,withannualreturnsbeingvolatileoverthepastfouryears[5]−Currenttradinglevelsofaround180 currently, with annual returns being volatile over the past four years [5] - Current trading levels of around 180 reflect a price-to-sales ratio of 1.6x, below the average of over 1.9x over the last five years [7] Future Expectations - There is potential for recovery in BA stock, driven by optimistic production targets and a focus on quality control and efficiency improvements [7] - The company is expected to return to profitability over the next year, with higher production targets and the possibility of the FAA lifting the production cap [7]