Buckingham Previews Boeing's Q3: 'Tactically Bullish'

Jet manufacturer Boeing Co BA is expected to report third-quarter results in late October in what could prove to be an "inconsequential quarter," according to Buckingham Research Group. 

The Analyst

Richard Safran maintained a Neutral rating on Boeing with an unchanged $395 price target.

The Thesis

Boeing is expected to earn $2.26 per share in the third quarter and "hemorrhage a bit less" than $2 billion in cash flow from operating activities, Safran said in a Friday note. (See his track record here.)

The company could report upside to estimates on the basis of strong government spending during a historically strong quarter, the analyst said.

Yet as long as the global fleet of 737 MAX planes remains grounded, the upcoming earnings report is unlikely to be a driver of the stock, he said. 

The Federal Aviation Administration could potentially certify the plane prior to Boeing's report, or Boeing could offer 2019 guidance in its report, the analyst said. But each scenario is unlikely, and investors shouldn't count on either occurring, he said. 

Boeing has three areas of concern, in Safran's view:

• When the company issues guidance. 
• What capital deployment looks like after the MAX resumes flights worldwide.
• The MAX delivery rate, including new production and inventory drawdown.

These three concerns will impact investor confidence in future cash flow estimates, the analyst said.

For the time being, a "tactically bullish" stance might be the best approach for investors, he said. 

Price Action

Boeing shares were down 1.17% at $382.50 at the time of publication Friday. 

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