How Ready Is Boeing Stock For Lift-Off?
It should be noted that Boeing’s (NYSE: BA) stock has rallied strongly from its post-pandemic lows at $113.02 in the past week and has cut its losses on the year to (-24%).
Despite the pandemic crushing Boeing, it is reaping the benefits of a rebound in the epicenter of the travel industry.
How Ready Is Boeing Stock For Lift-Off?
According to the Company, there has been a spike in demand for commercial aircraft as commercial traffic has increased to the highest levels since pre-COVID 2019 in both North America and Europe while China is behind.
Southwest Airlines (NYSE: LUV), Delta Air Lines (NYSE: DAL), and United Airlines (NYSE: UAL) are just a few of the major carriers that use our products.
The company also reported a positive cash flow of $100 million, a vast improvement over the $100 million it generated a year ago.
In the remainder of 2022, the Company expects to generate positive cash flow from operations. Currently, the company is awaiting clearance from the Federal Aviation Administration (FAA) before it can begin delivering the 787 to customers.
A backlog of over 4,200 commercial airplanes has been accumulated by the company, which totals $372 billion. In the wake of the 737 MAX disaster, there has been speculation about Boeing returning to profitability in fiscal Q3 2022.
There is no doubt that the Company is ready to turn the corner and emerge stronger than ever before. As of now, there are a number of headwinds, including supply chain constraints, logistics, raw material costs, inflationary pressures, and high fuel prices, among others.
As a result, Boeing is very optimistic about the recovery in air traffic, which is, in turn, boosting the demand for its planes, as airlines begin to ramp up their fleets as a result of the improved air traffic.
In order to gain exposure to the recovery of air travel, a prudent investor can look for opportunistic pullbacks in Boeing stocks that might be of interest.
Q2 Fiscal 2022 Earnings Release
Boeing released its fiscal second-quarter 2022 results for the quarter ending June 2022 on Jan. 19, 2022.
In terms of earnings-per-share (EPS), the Company reported a loss of (-$0.37) excluding non-recurring items, compared with consensus analyst estimates for a loss of (-$0.10).
Year-over-year (YoY) revenue fell (-1.9%) to $16.68 billion, missing analyst estimates of $17.53 billion. A positive operating cash flow of $100 million was achieved by the Company.
A total of $372 billion was accumulated in backlog, including over 4,200 commercial airplane orders. 737 production increased to 31 per month and 787 deliveries are awaiting FDA clearance.
According to Boeing CEO Dave Calhoun, the company made important progress across key programs in the second quarter and is building momentum in its turnaround effort.
As we continue to hit key milestones, we generated positive operating cash flow this quarter and remain on track to achieve positive free cash flow by 2022.
Despite our progress, we still have a long way to go. As we drive stability, improve performance, and continue to invest in our future, we will remain focused on safety, quality, and transparency.”
Conference Call Takeaways
In his opening remarks, CEO Calhoun gave a recap of the Farnborough Air Show, where he witnessed the 777X in flight and talked about the company’s investments in the eVTOL market through Wisk.
There were over 200 orders and commitments collected by the company that week from its suppliers, customers, and partners for its entire line of aircraft, from the 737MAX to the 777X. As a result, flight renewal projects were anticipated with great anticipation.
In the face of supply chain constraints, the customers are getting busier and beefing up their fleets to cope with the growing demand.
According to him, there were many positives in the quarter, including the incredible performance of the 737 MAX and the fact that the 787 is on the verge of being delivered once the FAA has given clearance.
In order to ensure the predictability of the delivery chain, they are focusing mainly on the engine supply lines and the constraints that engine suppliers have to deal with in the process.
It is also important to point out that the commercial service business was up 30% with strong margins to boot.
Through the end of the calendar year 2022, it is expected that operating cash flow will remain positive as it has turned positive ahead of plan.
As the airlines rebuild their airplane fleets for the future so that they are able to meet the significant demand from customers in the near future, the supply constraints are not deterring the increasing demand from customers.
Despite the fact that COVID is slowing down China, it along with the geopolitical overhang should not affect the overall positive cash flow position it has taken over the year.
There is no doubt that global services are on their way back in a big way.
BA Opportunistic Pullback Levels
When using the rifle charts on a weekly and daily basis, it is possible to have a precise idea of how BA stock is performing on the market.
A double top has been formed on the weekly rifle chart uptrend near the Fibonacci (fib) level of $163.35 on the weekly rifle chart.
Generally, a weekly rifle chart breakout has a 5-period moving average (MA) support rising at $148 followed by a 15-period MA support rising at $142.62.
Currently, the weekly 50-period MA sits at $186.81. Currently, the weekly stochastic formed a mini pup rising through the 40-band.
The weekly market structure low (MSL) buy triggered a breakout above $140.70. However, the daily uptrend has stalled into a make-or-break situation due to the 5-period MA starting to slope down at $156.40 with a rising 15-period MA at $151.18. Consequently, the daily stochastic has fallen below 80 on daily basis.
The daily 200-period MA sits at $181.78. The daily upper Bollinger Bands (BBs) sit at $170.06. Support for the daily 50-period MA sits at $138.37.
Support for the daily lower Bollinger Bands (BBs) sits at $125.76. Prudent investors can watch for opportunistic pullback levels at the $147.18, $144.65, $140.70 weekly MSL trigger, $135.59 fib, $130.33 fib, $127.01, $121.49 fib, and the $120.05 fib.
From the $174.07 fib level up to the $202.93 fib level, the upside trajectories range from a flat to an upward trajectory.