Boeing had its best quarter of plane deliveries since 2018, Wall Street expected Boeing to return to profitability and post earnings of $0.37 per share in Q4, and its operating cash flows will likely remain strong.
Boeing is scheduled to announce Q4 earnings results before the market opens on Wednesday, January 25.
Latest Results
It reported a $5.49 loss per share in Q3, compared with a loss of 19 cents a share in the same period last year, revenue was $15.956 billion, compared with $15.278 billion in the year-ago quarter.
Q4 Guidance
The company said it continues to expect positive free cash flow for 2022. Its CEO cut his full-year target for MAX deliveries to 375, from the low 400s previously.
Analysts expect Boeing to post earnings of $0.37 per share in Q4. Wall Street expects Boeing to return to profitability, while its operating cash flows will likely remain strong, reflecting higher commercial airplane deliveries.
Boeing Just Had Its Best Quarter of Plane Deliveries Since 2018
The company delivered 69 planes in December and 152 planes in Q4. That's the highest quarterly delivery figure since 2018 Q4 when Boeing delivered 238 planes.
For the full year, Boeing delivered 480 jets in 2022, up from 340 delivered in 2021. Boeing delivered 806 jets in 2018, the year before any impact from the 737 MAX's grounding or the Covid-19 pandemic, and received net 774 commercial orders in 2022.
Focus on Increased Debt and FCF in Q4
Substantial debt was added during the Covid pandemic, such that the Q3 enterprise value is $43 billion higher than the market cap. Back in 2018, the net debt load was reasonable, such that the enterprise value was only about $5.4 billion more than the market cap.
Another thing to mention is that its FCF. The November 2022 Investor Conference presentation shows that FCF inQ4 is expected to be about $2.5 billion, such that the full year FCF for 2022 should be around $1.5 to $2 billion; FCF in 2023 should be $3 to $5 billion; while the FCF objective for 2025/2026 is about $10 billion.
Analyst Opinions
Morgan Stanley analyst Kristine T. Liwag downgraded it to Equal-weight from Overweight but raised its price target to $220 from $213. Despite the strong demand for aircraft, it saw the supply chain as a bottleneck for further production/delivery increases, which is the key milestone for cash generation, and its valuation on a free cash flow basis typically peaks in anticipation of a significant improvement in free cash flow.
JP Morgan analyst Seth Seifman reiterated an Overweight rating and raised the price target from $200 to $207. Q4 deliveries leave Boeing well-positioned to meet or exceed the Q4 Free Cash Flow guide of about $2.5 billion, and the company can reach the higher end of guidance for 70-80 787 deliveries in 2023.
Wells Fargo maintained an Overweight rating and raised its price target to $240 from $218, it stated that strong cash generation through 2025 as new aircraft investment drops to new lows, production returns to high rate and mix improves, and it has under-supplied the market for new passenger jets since the MAX groundings in 2019. Moreover, the reopening of China also removed other major bottlenecks to growth.