Boeing's Recent Weakness Presents Buying Opportunity

Boeing shares have been underperformers over the past quarter, declining 1 percent compared to an increase of 4.5 percent for the S&P 500.

Analyst John Eade said Boeing's growth will come from its strong foothold in the commercial aerospace industry where customers upgrade to more fuel-efficient and technologically advanced aircraft.

The analyst highlighted the company's commercial aircraft backlog of $417 billion, which includes more than 5,700 aircraft orders, which represents approximately seven years of production.

Meanwhile, Boeing's second-quarter numbers were hurt by substantial charges related to aircraft production. On a non-GAAP basis, which included charges, the company reported a per-share loss of $0.44 versus the year-ago earnings of $1.62.

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The company continues to expect 2016 revenues of $93 billion–$95 billion and operating cash flow of $10 billion, but core EPS is now expected to range between $6.10 and $6.30, down from the prior forecast of $8.15–$8.35.

To reflect the charges, Eade lowered his 2016 EPS estimate to $6.27 from $8.45. However, based on the margin expansion in both operating divisions, the analyst raised his 2017 EPS estimate to $9.70 from $9.40.

The company expects commercial aircraft deliveries this year of 740–745 (down from 762 in 2015), but continues to expect deliveries to ramp up beyond 900 per year through the end of the decade.

"[T]he long-term trends remain in place and we look for management to deliver growth in 2017 and beyond," Eade said.

At time of writing, shares of Boeing were up 0.8 percent to $132.22.

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