Why Boeing Q1 Numbers May Disappoint

Sterne Agee still rates the stock a Buy with a price target of $196 per share, well above the consensus target of $160.75.

The analysts believe that Boeing delivered about 64 commercial aircraft in March: 43 737s, two 747-8s, two 767s, 10 777s and seven 787s. Boeing delivered 113 planes in the first two months of the year, which indicates that the first-quarter total will be 177, compared with Sterne Agee’s prior estimate of 180 deliveries.

For the first quarter, Sterne Agee estimates 787 deliveries will total 26, and total 2015 deliveries of the Dreamliner are forecast to reach 123 planes.

Through March 24, Boeing has taken new orders for 80 commercial aircraft in 2015. An order for three 787-10s was signed with All Nippon Airways (ANA) last week, the first new order for the Dreamliners since last December.

Sterne Agee points out that the company needs to book 40 to 60 new orders annually to sustain the current production rate on the 777 until the new 777X is ready for delivery late in 2019. So far in 2015, Boeing has taken just seven orders for the 777.

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The analysts have pegged free cash flow per share of $9.17 in 2015, rising to $14.76 per share in 2018. The forecast for free cash flow depends on Boeing’s ability to liquidate its deferred production balance for the Dreamliner program, which Sterne Agee expects to peak at around $28.5 billion in the third quarter of this year. According to the firm, the fourth quarter of 2015 will see the deferred production balance stabilize and the balance should begin to fall in the first quarter of next year.

Boeing stock traded down about 1.4% just before noon on Wednesday, at $148.05 in a 52-week range of $116.32 to $158.83.