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By Brendan Gilmartin

Overview

Boeing (BA) is scheduled to report 3Q 2011 earnings before the opening bell on Wednesday, October 26. Results are typically available at approximately 7:30 a.m. EST. A conference call is scheduled to follow at 10:30 a.m. Boeing is a member of the Dow Jones Industrial Average and widely-held name with the potential to significantly impact the broader market indices, including the index futures and other asset classes.

Outliers & Strategy

  • Earnings Per Share (EPS) is usually comparable to consensus estimates.
  • Guidance:
    • Earnings Per Share (EPS) Guidance (2011): Previous Forecast: $3.90 to $4.10 (up from $3.80 to $4.00).
    • Revenues Guidance (2011) (Previous Forecast: $68 bln – $71 bln).
    • Airplane Deliveries Guidance (2011) (Previous Forecast: 485 – 495).
    • Keep an eye on the FY2011 guidance. Last quarter, Boeing raised the outlook to $3.90 to $4.10. The consensus is $4.26, implying another increase in the outlook may be on the way.
    • Given its weight and influence on the markets, Boeing is capable of sparking movement in broad market indices such as the S&P Futures, Dow Futures, and S&P E-Minis. Some secondary plays to watch off the Boeing release include Precision Castparts (PCP), Spirit AeroSystems (SPR), BE Aerospace (BEAV), and Titanium Metals Corp. (TIE), all of which are component suppliers to the 787.
    • Honeywell (HON) reported stronger than expected 3Q earnings on 10/21 citing “a particularly robust Commercial Aerospace upcycle.” United Technologies (UTX) also posted robust results and increased the outlook, as Pratt & Whitney’s large engine business grew 3%, after growing 35% in the year ago third quarter.
    • Boeing is expected to earn $1.09 per share (range is $0.96 to $1.26) (Source: Yahoo! Finance). The revenue forecast is $17.87 bln.

Recent News

  • 10/01: According to a piece in Barron’s, Boeing shares are poised to move sharply higher, thanks to the recent delivery of the first 787 Dreamliner and the order backlog for 820 planes. The article suggests the shares could rise 30%.
  • 09/26: Jefferies reiterated a Buy rating and a $90 price target on Boeing, citing the ramp-up of the 787, along with improved operating performance and sustainable free cash flow. Benzinga.com
  • 09/26: Boeing delivered the first Dreamliner 787 to Japan’s All Nippon Airways.
  • 09/07: Boeing said it projects that China will require 5,000 new commercial airplanes valued at $600 bln over the next 20 years.

Technical Overview

Boeing recently climbed above the downward-sloping tend-line going back to early July, while the 20-Day SMA crossed back above the 50-Day SMA, and the MACD turned positive – all indications pointed toward improving momentum. Boeing now faces modest resistance at $66, followed by $68, and the 200-Day SMA near $69.50. Support is at the 20-Day & 50-Day crossover near $62.50, followed by $59.00. (Chart courtesy of StockCharts.com)

Summary

Boeing shares are moving higher headed into the 3Q 2011 earnings release, following its first delivery of the long-awaited 787 Dreamliner and recent economic data suggesting the outlook may not be as bleak as many feared. A string of stronger than expected earnings releases from GE, Honeywell (HON), and United Technologies (UTX), coupled with a record order backlog also bodes well, while the Street is betting Boeing may raise its 2011 EPS outlook.

Disclaimer: By using this report, you acknowledge that Selerity, Inc. is in no way liable for losses or gains arising out of commentary, analysis, and or data in this report. Your investment decisions and recommendations are made entirely at your discretion. Selerity does not own securities in companies that they write about, is not an investment adviser, and the content contained herein is not an endorsement to buy or sell any securities. No content published as part of this report constitutes a recommendation that any particular investment, security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Source: Earnings Preview For Boeing 3Q