On Wednesday, Morgan Stanley (NYSE:MS) maintained its Equalweight rating and $180.00 price target on Boeing (NYSE:BA) following the aerospace giant's recent earnings report. The analyst highlighted Boeing's adjusted earnings per share (EPS) of $-1.13, which surpassed the consensus estimate of $-1.63 by 30.8% and Morgan Stanley's estimate of $-1.73 by 34.5%. This performance exceeded expectations primarily due to stronger results in the Defense and Global Services segments.
The Defense segment of Boeing reported an operating margin of 2.2%, compared to the anticipated -0.6% by consensus and 1% by Morgan Stanley's estimate. Furthermore, the Global Services division posted an 18.2% margin, which also exceeded the consensus forecast of 16.8% and Morgan Stanley's projection of 17%. These figures suggest that both divisions have outperformed market expectations.
Boeing indicated that it has slowed down production of its 737 program to below 38 aircraft per month to integrate improvements into its quality management system. The company is actively working on an action plan in response to feedback from a Federal Aviation Administration (FAA) audit. Additional details regarding the current state of production for Boeing's major aircraft programs are expected to be discussed during the earnings call scheduled for this morning at 10:30 AM ET.
According to preliminary delivery data for April from Cirium, Boeing has made only 5 deliveries of the 737 model this month to date. Morgan Stanley's analysis suggests that 2 of these deliveries originated from the production line, while the remaining 3 were fulfilled from existing inventory. This delivery pace is part of the ongoing developments that Boeing is addressing in its production and quality management processes.
InvestingPro Insights
As Boeing navigates through its production and quality management challenges, insights from InvestingPro provide a broader perspective on the company's financial health and market position. According to recent data, Boeing's market capitalization stands at $103.22 billion, reflecting its significant presence in the aerospace industry. Despite a notable revenue growth of 16.79% over the last twelve months as of Q1 2023, the company's gross profit margins remain thin at 11.89%, aligning with the concerns highlighted by InvestingPro Tips regarding Boeing's profitability struggles.
InvestingPro Tips also reveal that Boeing is currently trading near its 52-week low and has experienced a substantial price drop of over 20% in the last three months. This volatility in stock price movements is a critical factor for potential investors to consider, particularly as analysts have revised their earnings downwards for the upcoming period. For those seeking a more in-depth analysis, there are an additional 11 InvestingPro Tips available, offering valuable insights into Boeing's performance and future prospects.
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