How Analysts Reacted to Boeing Q1 Earnings

After Boeing Co. (NYSE: BA) reported earnings last Wednesday morning, the stock opened nearly flat with Tuesday’s close but finished the day up 2.4% and was the leading gainer among the 30 stocks in the Dow Jones Industrial Average. The company had lowered expectations when it reduced its 2016 deliveries estimate in late January, so there has been plenty of time for analysts to think through what’s on tap for the company in 2016.

The first-quarter report was better than expected, but more charges against the Air Force tanker and 747 programs cost the company 24 cents in earnings per share. Still, Boeing continued its buyback program ($3.5 billion in the first quarter) and continues to pay its quarterly dividend of $1.09 per share (a yield of 3.33%). From a shareholder’s point of view, those are solid reasons to like and own the stock.

There were contrary opinions though. Merrill Lynch maintained its Underperform rating on the stock, citing new competition from Bombardier, which announced Thursday that it won an order for up to 125 of its new CSeries planes, beating out both Boeing and Airbus. The analysts also noted that the company’s “reactive strategy may hurt long-term advantage.” That’s a reference to Boeing’s recent shopping of a new variant of the 737 MAX to compete with the Bombardier planes.

S&P Capital IQ maintained its Buy rating on Boeing stock and kept its 12-month price target of $160. The analysts did trim their full-year 2016 earnings per share estimate from $8.57 to $8.45, however. S&P also liked Boeing’s $480 billion backlog and said it is “supportive of top and bottom line growth.” The firm is also “positive on [the] aggressive share buyback program and 3.3% dividend yield.”
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Other analysts also weighed in:

• Bernstein raised its price target from $180 to $184.
• Canaccord Genuity lifted its price target from $135 to $140 and rates the stock at Hold.
• Goldman Sachs has a Sell rating on the stock but raised its price target from $100 to $101.
• JPMorgan raised its price target from $120 to $140 with a Neutral rating.
• RBC upped its price target from $128 to $132 with a Sector Perform rating.
• SocGen raised its price target from $129 to $140 and has a Hold rating on the stock.

At Friday’s closing bell, Boeing’s shares traded flat for the day at $134.80, in a 52-week range of $102.10 to $150.59. The stock ended the week with a gain of about 3.3%. The current consensus price target on the stock is $145.17 and may not include all the recent changes.