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Chasing Value: Looked at Boeing, Then Looked Away

In considering my 2011 picks I took a look at Boeing Co (BA), interested by the story. There are many ways for this company's future to play out in a very positive scenario.

The airline industry has been rejuvenated as of late -- and that is good news for aircraft manufacturers. The Republicans won the house majority and that usually improves the fortunes of defense contractors.

The 787 Dreamliner, now three years and counting behind schedule, is in test flight mode. The plane portrayed as a dream to travelers and airline companies has turned into a nightmare of sorts, or at least the dream has changed. Boeing is dreaming of the day they start manufacturing and selling and profiting from all their labor.

Continue reading Chasing Value: Looked at Boeing, Then Looked Away

Boeing Could Be Facing Even More 787 Delays

Boeing (BA) logoBoeing (BA - option chain) stock is trading lower today on conflicting reports about the company's timeline for the debut of its highly-anticipated, but much-delayed 787 Dreamliner. Aviation Week published a report late Friday that the company has told several customers that delivery of its 787 Dreamliner will be delayed by up to 10 months, but Boeing denies this report, saying it intends to meet the current delivery date of Q1 2011. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on BA.

Continue reading Boeing Could Be Facing Even More 787 Delays

Boeing Ready to Climb to Cruising Altitutde

BoeingBoeing Co. (BA) announced Friday that delivery of its 787 Dreamliner is going to be delayed until the middle of Q1 2011. This is disappointing news, but don't let it cloud your outlook on Boeing too much.

Goldman Sachs has Boeing on its conviction buy list and recently raised its earnings-per-share estimates for Q3 from $1.02 to $1.09 and for Q4 from $1.12 to $1.15. Goldman is also maintaining a price target of $84 for the stock, which is 37% higher than Boeing's current price of $61.

Continue reading Boeing Ready to Climb to Cruising Altitutde

Boeing Upgraded by Goldman Sachs

Goldman Sachs on Monday upgraded Boeing (BA) to conviction buy from neutral, elevating the aerospace firm's price target to $90 from $82.

According to MarketWatch, the brokerage said it believed that "suppliers would outperform Boeing," but now it thinks Boeing will continue to outperform because "it spans nearly every positive global theme that is driving outperformance in stocks today." As examples, Goldman cited Boeing's "BRICs exposure, credit normalization, a product story, the consumer recovery, favorable industry structure, and favorable company-specific dynamics."

Continue reading Boeing Upgraded by Goldman Sachs

Dog of the Dow #4: Boeing (BA)

Boeing (BA) hung its future on the Dreamliner, but this messy project has turned into quite a nightmare for stockholders. The next-generation plane is two years late after five delays ... so I'll believe this launch when I see it.

It's tough to trust a company that is this poorly run.

Next: Dog of the Dow #5: Chevron (CVX)

Closing Bell: Stocks move away from dollar & oil (DNDN, FNM, SNSS, IMAX, RX, BA, ERTS)

We started seeing some divergence again as stocks rose while the dollar was up and oil was down. Maybe markets will go back to acting more on their internal fundamentals and their own technical patterns rather than that of the dollar or the price of oil, as crude closed under $70 and as stocks stayed strong. Inflation was rather tame at 0.7% in commodity imports if you take out the price of oil. Overseas market strength kept a solid floor under any selling attempts by bears today.

Here are the unofficial closing bell levels:

Dow 10,471.50 +65.67 (0.63%)
S&P 500 1,106.41 +4.06 (0.37%)
Nasdaq 2,190.31 -0.55 (-0.03%)

Top 10 Analyst Calls
Top 5 Day Trader Alerts

Continue reading Closing Bell: Stocks move away from dollar & oil (DNDN, FNM, SNSS, IMAX, RX, BA, ERTS)

Ray of light: Airlines say travel slump has ended

This constitutes multiple 'rays of light:' United Airlines (UAUA) Tuesday announced that it would acquire 50 new planes. Twenty five are The Boeing Company (BA) 787 Dreamliners and twenty five Airbus A350 XWBs -- widebody planes with a list price of $9 billion, CNNMoney.com reported.

And Wednesday Delta Air Lines Inc. (DAL) and United indicated that business travel is improving and that the worst of the travel demand slump was over, Bloomberg News reported.

Continue reading Ray of light: Airlines say travel slump has ended

Like its parts, Precision Castparts is soaring

With Precision Castparts Corp. (NYSE: PCP), as air travel goes, so go the profits, which is why I'm Reiterating my Buy rating for the company, first recommended on April 20, 2009, at a price of $61.92. If you bought PCP in April, you're up an impressive 50%.

Precision is a major maker of jet engine components, and PCP will benefit as engine orders ramp-up in FY2010. By most measures, an industrial bottom is occurring in the U.S. and global economies in Q3/Q4. Hence, rising demand coupled with the need to re-stock inventories of parts bodes well for Precision. The key revenue drivers: 1) emerging market economies that are modernizing their airline fleets and increasing fleet sizes and 2) Boeing's (NYSE: BA) new 787 Dreamliner, which should undergo its first test flight by the end of 2009.

Continue reading Like its parts, Precision Castparts is soaring

Boeing announces more 787s, receives an upgrade

According to FlightGlobal, Boeing (NYSE: BA) is going to "surge" (a very popular word nowadays) 787 production early in order to meet customer demand. The surge is part of the establishment of the Charleston 787 line. Boeing will use "transitional surge capability" until the second 787 line is on line; this capability will take place at Boeing's current Washington line. As far as the new South Carolina plant, the facility will support the testing and the delivery of the airplanes.

In addition to this news, Boeing received an upgrade from Macquarie Research, as the airliner was elevated to "outperform" from "neutral." Valuation was the main reason for the upgrade, as the brokerage feels that the current pullback may afford a good buying opportunity.

Continue reading Boeing announces more 787s, receives an upgrade

Closing Bell: The good off day (BA, JAVA, SLM, WFC)

Today was one of those days where it felt like it would be an up-day and most traders were feeling good, but the last hour's trading came down so far so fast that traders had little feel whether we'd have an up or down session until right before the closing bell.

Oil inventories were not a huge surprise like the week before, but the data sent oil much higher and then a weak US dollar only added to oil price gains. Some may use the Beige Book as the reason for the sell-off, but it might be how little the government expects Wall Street executives to work for if they are a TARP bank.

Here were today's unofficial closing bell levels:

Dow 9,956.91 -84.57 (-0.84%)
S&P 500 1,081.36 -9.70 (-0.89%)
Nasdaq 2,150.73 -12.74 (-0.59%)

Top Day Trader Alerts
Top 10 Analyst Calls
Top Stock Rumors

Continue reading Closing Bell: The good off day (BA, JAVA, SLM, WFC)

Closing bell: The consumer's retreat takes Wall Street down (BBI, BA)

The only really important bit of financial news today was the Reuters/University of Michigan consumer sentiment figure for August. It declined to 63.2 from 66 in May. The consensus among economists polled by MarketWatch was the August's figure would be 69. The portion of the poll called the "expectations index" hit its lowest level since March.

That is particularly bad news because March was the depth of the recession. Analysts were at a loss to explain why the consumer's picture of the economy had turned sour so fast. It is certainly a sign a rebound in spending may be well off in the future, which could be bad news for the upcoming holiday season.

Today's unofficial closing numbers:

Dow 9,321.40 -76.79 (-0.82%)
S&P 500 1,004.09 -8.64 (-0.85%)
Nasdaq 1,985.52 -23.83 (-1.19%)

Continue reading Closing bell: The consumer's retreat takes Wall Street down (BBI, BA)

Strike leads to 15% drop in Boeing's 2008 deliveries

Last fall, Boeing's 27,000 machinists went on strike for 52 days. Not surprisingly, this put a crimp in Boeing's ability to meet its production schedule. Until today, it was hard to know just how much damage that strike did. Now we know that Boeing's 2008 aircraft deliveries dropped 15% thanks to the strike. But big questions remain for investors.

The numbers are not pretty. Boeing delivered 375 commercial planes in 2008, 15% fewer than the 441 it delivered in 2007. Prior to the strike, in early 2008, expectations for the year ranged from 475 to 480. But Boeing fell far short. Boeing finished 2008 with 662 commercial airplane orders, bringing its total backlog of unfilled orders to over 3,700. But the 2008 figure was less than half 2007's record order amount.

Meanwhile, Boeing's 787 Dreamliner -- which accounts for 900 aircraft in that backlog -- is about two years behind schedule. The 787's delays are taking engineers away from other projects, such as the one to update its 747 jumbo jet, which has now been delayed nine months. Despite all this bad news, we still don't know how much these delays will cost Boeing in lost revenues and profits. And it remains to be seen whether the fourth 787 production delay will be its last.

Continue reading Strike leads to 15% drop in Boeing's 2008 deliveries

Is Boeing's fourth 787 delay its last?

The Boeing Company (NYSE: BA) has announced its fourth delay in delivering its first of nearly 900 unit order backlog of its 787 Dreamliner from the original May 2008 to the current first quarter 2010. After parts problems and an eight week machinists strike, this does not come as a surprise but many customers are probably wondering whether there will be more delays in the future. Unfortunately, it is unclear whether Boeing has learned enough from these delays to keep them from happening in the future.

If a study by Boeing competitor, Airbus, is to be believed, the 787 has been plagued by a wide range of management problems. The study suggests that when Boeing outsourced a significant portion of the 787's design and assembly integration, it failed in overseeing those partners. Airbus's study suggests that Boeing should have known about the following six problems:

  • Its partners' factory workers lacked the skill to do their jobs - The study claims that these workers were "low-wage, trained-on-the-job workers that had no previous aerospace experience."
  • Some of its partners lacked design staff - The study claims that one of its partners, Vought, "had no engineering department when selected" by Boeing.
  • Some of its suppliers could not produce enough parts - The study claims there was "insufficient supply of frame, clips brackets and floor beams."

Continue reading Is Boeing's fourth 787 delay its last?

Will Boeing delay Dreamliner six more months?

The Boeing Company (NYSE: BA) has had significant problems meeting its schedule to deliver its new 787 Dreamliner. It has a nearly 900 aircraft backlog but it has delayed the delivery three times already. Now it looks poised to announce a fourth one -- as long as six months. This is making customers frustrated and is likely to cost shareholders.

The 787's delays have resulted from a variety of problems. The most significant was that Boeing outsourced some 70% of the design and manufacture of the 787 to suppliers around the world -- with the idea of snapping the pieces together in Washington state when the components were ready. But Boeing did not monitor the suppliers closely enough so it was surprised when some of them did not meet their production schedules.

Meanwhile, the strike by its machinists union has delayed by 10 weeks the delivery dates of the 3,734 jetliners in its order book. But the 787 is running into other problems such as still fixing bugs in the software that runs its systems, from the electric brakes to cockpit instruments. And with customers being frustrated by the missed delivery dates, Boeing is struggling with how much slack to build into the schedule so it can give them a truly firm date.

Continue reading Will Boeing delay Dreamliner six more months?

Boeing settles strike too late

Boeing (NYSE: BA) settled its seven-week old strike with machinists agreeing to a four-year contract. In the meantime, the company has lost precious time building planes including its Dreamliner, which is already over a year late for its first delivery. World airlines that have ordered the new aircraft are already in a snit.

According to The Wall Street Journal, "During the standoff, both sides dug in over issues such as job security and who had ultimate authority to run the factories, even as the national economy was undergoing a major upheaval." In other words, Boeing undercut the value of its shares when it could have settled on a similar deal a month ago. During most negotiations management knows how far it is willing to go, but holds out hoping labor will back down. In this case, that did not happen.

While Boeing management has been fiddling around, the company's stock has dropped to $42, near a 52-week low, and down from a period high of almost $99. Boeing faces angry customers, many of whom are asking for compensation for planes that will be late.

Boeing let labor shut it down while the economy went to hell in a hand-basket and its rival Airbus took whatever advantage of that it could. Boeing has a huge back-order of planes. Giving into the union would not have cost it much in profits. It has too many sales to fulfill.

Douglas A. McIntyre is an editor at 247wallst.com.

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