Dow component The Boeing Company (BA) reports a profit for the third quarter of 2020 in the pre-market on Wednesday. Analysts expect a loss of USD 2.20 per share on sales of USD 14.2 billion. The struggling aerospace giant reported earnings of $ 1.45 per share in the third quarter of 2019, indicating a historic decline attributable to mismanagement and the COVID-19 pandemic. The aerospace giant’s share price has changed little since the second quarter report in July, and is now less than two points below the end of that session.
The central theses
- Boeing is expected to report another quarterly loss on Wednesday morning.
- The stock hit a hold pattern in the 160s that has barely changed since July.
- The second wave of pandemics increases the risk of renewed selling pressure.
- The aerospace industry may not recover until the second half of this decade.
Boeing stock gained ground on October 16 after European Union regulators ruled the 737-MAX was again safe to fly. However, it fell significantly on Monday morning in response to an unconfirmed report the Federal Aviation Administration (FAA) found that the 737-MAX software update for “certain aircraft” was not “appropriate”. International ties also weigh on price movements after China announced it would sanction the company for cutting a Taiwanese arms deal.
Boeing lowered its annual forecast for the commercial and defense aerospace markets earlier this month, forecasting a total market value of $ 8.5 trillion, compared to previous estimates of $ 8.7 trillion. The company predicts demand for 18,350 commercial aircraft over the next decade, 11% less than previous projections. Even this shutdown may seem overly optimistic as the idle fleet grows rapidly and expensive jumbo jets are increasingly abandoned.
The consensus on Wall Street has been overly optimistic since the March 2019 crash. The current rating “Moderate Buy” is based on eight recommendations “Buy”, nine “Hold” and only one recommendation “Sell”. Price targets Currently, they range from a low of $ 147 to a street high of $ 260 as the stock opened the session about $ 24 below the median of $ 188 on Monday. Those numbers still seem too high given declining aerospace demand and ongoing uncertainty about pandemics.
Earnings per share (EPS) are calculated as the company’s profit divided by the shares outstanding its common stock. The resulting number serves as an indicator of a company’s profitability. It is common for a company to report EPS that is customized extraordinary items and potential share dilution. The higher a company’s EPS, the more profitable it is considered to be.
Boeing Monthly Chart (2007-2020)
Boeing stock broke $ 107.83 above its 2007 high in 2013 and fell into a tight trading range to run new tests support for more than three years. It finally escaped gravity in early 2017 and entered a historic trend that stalled in the $ 370 years of 2018 when President Trump fired the first shot in the trade war with China. The stock broke out again in February 2019, hitting an all-time high of $ 446.01 in March just before crashing in Ethiopia.
The subsequent decline crept towards the 2018 low, reaching within a few points in February 2020 and collapsing during the sell-off. Boeing hit a seven-year low in March and bounced back from the broken 200 months exponential moving average (EMA) in June. The pressure to buy then eased and resulted in a support test that will be conducted before the confessional for the third quarter of this week. The mid-150s has emerged as the critical price point for this exercise, with a breakdown suspending a trip to the previous lows.
A little piece of good news could go a long way in this scenario, but time is running out as the second wave of pandemics undermines months of mood improvement here and in Europe. As a result, crowded hospitals could easily get past the 737-MAX recertification in the coming months, triggering an uncomfortable slide back into double digits. Given this extraordinary risk, the vast majority of investors will be better off looking for other bottom fishing opportunities.
Bottom fishing refers to investments in assets that have declined due to intrinsic or extrinsic factors and are considered undervalued. A bottom fisherman, a nickname for investors who practice the bottom fishing strategy. speculatedwith either technically or fundamental Analysis techniques where the depressed price of an asset is temporary and over time recovers into a profitable investment.
The bottom line
Boeing should get 737-MAX recertification in the coming months, but the aerospace industry may not get back to normal until the second half of the decade, undermining its stock value.
Disclosure: The author held no positions in any of the above securities at the time of publication.