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Boeing share price and Q3 earnings results preview


MongiIG

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What to expect and how to trade Boeing’s upcoming results from a fundamental and technical perspective.

Boeing's share price: what to expect from Q4 results | IG South AfricaSource: Bloomberg
 
 Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Wednesday 19 October 2022 

When are Boeing’s results expected?

Boeing is set to release its third quarter (Q3) 2022 results on 26 October 2022. The results are for the fiscal quarter ending September 2022.

What is ‘The Street’s’ expectation for the Q3 2022 results?

‘The Street’ expectations for the upcoming results are as follows:

Revenue of $18,065 billion : +18.24% year on year (YoY)

Earnings per share (EPS): $0.62 (>100% YoY)

The Boeing share price managed to stabilise around the $121 level, not far above the June low at $113.02, in early October despite China orders drying up on tensions with the US amid a global pick-up in demand due to global air travel reaching over 75% of pre-Covid-19 traffic.

China has traditionally split aircraft orders evenly between Airbus and Boeing but in September the American airplane maker missed out on a 40-plane contract, following an even bigger hit in July when China ordered 292 Airbus aircraft worth about $37 billion.

In addition, China’s aviation authority still hasn’t given permission for Boeing’s 737 Max airplanes to resume their service throughout China, despite the model being cleared in most other major markets. China was the first to ground the 737 Max after the plane’s deadly crashes in Indonesia and Ethiopia in 2018 and 2019.

Aviation data provider Cirium calculated that Chinese airlines have 229 Boeing Max 737 planes on order, including more than 100 newly built ones waiting in the airplane manufacturer’s factories.

Boeing is not prepared to wait after China, though, and is in talks with several airlines, amongst them Air India, which is overhauling its fleet under new owner Tata Group, to offload some of its planes it currently cannot deliver to China.

Dave Calhoun, Boeing’s chief executive officer (CEO), in September said that Boeing “can’t wait forever” and that the plane maker was putting a relatively small number of jets back on the market. Boeing has about $5 billion in cash tied up in the already-built jets earmarked for China, according to George Ferguson, analyst with Bloomberg Intelligence.

Although not a threat to Western aircraft manufacturers as yet, Commercial Aircraft Corp of China Ltd.’s (Comac) C919 airplane was formally certified in Beijing at an event attended by President Xi Jinping in late September. It opens the way for the Chinese airplane manufacturer to enter the fray and might lead to it selling its planes to its Asian neighbours and beyond in future years.

How to trade Boeing into the results

Boeing analystsSource: Refinitiv

 

Refinitiv data shows a consensus analyst rating of ‘buy’ for Boeing – 8 strong buy, 14 buy, 4 hold, 1 sell and 1 strong sell - with the median of estimates suggesting a long-term price target of $196.00 for the share, roughly 42% higher than the current price (as of 18 October 2022).

IG BoeingSource: IG

 

IG sentiment data shows that 96% of clients with open positions on the share (as of 18 October 2022) expect the price to rise over the near term, while 4% of these clients expect the price to fall whereas trading activity over the last week and month showed 54% to 55% of sells respectively.

Boeing – technical view

The Boeing share price has been slipping since March 2021 and dropped by around 35% year-to-date with it recently trading at levels last seen in June of this year.

Boeing weekly chartSource: ProRealTime

 

From a technical perspective the share price is in the process of at the very least forming a minor bullish reversal, having earlier this week risen and closed above its $135.74 mid-pattern 10 October high on a daily basis.

The 21 September high and 55-day simple moving average (SMA) at $149.83 to $150.00 are thus in focus.

For a longer-term bullish trend reversal to be seen, however, a rise and weekly chart close above the 200-day simple moving average (SMA) at $164.93 and, more importantly, the August peak at $173.85, would need to occur. In such a scenario a major double bottom would be formed.

While the share price remains below the and 55-day simple moving average (SMA) at $149.83 to $150.00, the downtrend will remain intact despite the August-to-October downtrend line at $134.00 having been broken through.

Boeing daily chartSource: ProRealTime

 

Having said that, while last week’s low at $124.17 underpins, a short-term uptrend is in place, but it has to be viewed within the context of the medium- and long-term downtrends which continue to weigh on the Boeing share price for the time being.

Were key support between the early and mid-October lows at $124.17 to $120.99 to be slipped through, the minor psychological $100 mark would be in focus as well as the March 2020 pandemic low at $89.00.

Summary

Boeing is set to release Q3 2022 results on 26 October 2022.

Q3 2022 results are expected to show a 18% YoY increase in revenue as well as an over 100% increase in EPS.

Revenue is expected to be boosted by a pick-up in demand as global air travel reaches over 75% of pre-Covid-19 traffic and despite China orders drying up on tensions with the US.

Long-term broker consensus suggests the share to currently be a ‘buy’, with a median price target of $196.00.
96% of IG’s clients with open positions are long the share but trading activity over the last week and month showed around 55% of sells.

The Boeing share price has been slipping since March 2021 and year-to-date trades down by around 35% but is in the process of at least short-term forming a bullish reversal pattern.

The share would need to see a daily chart close above the 21 September high and 55-day simple moving average (SMA) at $149.83 to $150.00 for a medium-term bullish reversal to become possible. Major support sits at the early and mid-October lows at $124.17 to $120.99.

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