Boeing cash flow on investor radar as supply disruptions shackle output

Boeing’s (BA.N) cash flow will be the focus on Wednesday when the U.S. planemaker reports results as production snarls limit its ability to take advantage of a rise in demand for long-haul Dreamliner jets amid an insatiable appetite for air travel.

Some analysts expect the company to push its goal of positive cash flow to 2023 from this year as inflation drives up costs and supply chain disruptions hamper its ability to raise jet production.

“We have a feeling that because of the delays in commercial airplanes and some of the issues they’ve had with their defense programs … they will struggle to hit break even or positive free cash flow in 2022,” Melius Research analyst Robert Spingarn said.

The planemaker is expected to burn about $1.2 billion cash in the second quarter ended June, as per Refinitiv data.

Investors will also be waiting for updates on China, one of the world’s largest domestic aviation markets, where the 737 MAX has yet to resume commercial flights.

THE CONTEXT
Resuming deliveries of the popular Dreamliner jet and obtaining approval for the 737 MAX 10 – the largest member of its best-selling single-aisle airplane family – are crucial milestones in Boeing’s quest to emerge from successive crises.

In April, Boeing cast doubt on its ability to hit its previous full-year delivery target of about 500 for the MAX. Investors expect that number to be closer to 400, RBC Capital Markets said in a note.

Boeing earlier this month said it was “very close” to resuming deliveries of the 787 Dreamliner, parked at hangars for more than a year to rectify a series of defects.

The company, which secured fresh orders for the long-haul jet at the Farnborough Airshow, expects orders to pick up once deliveries restart.

THE FUNDAMENTALS
** Boeing is expected to report Q2 revenue of $17.57 billion, up 3.4%, as per Refinitiv data.

** Adjusted loss per share is estimated at 14 cents. Last year, Boeing reported an adjusted profit of 40 cents per share.

WALL STREET SENTIMENT
** 20 out of 26 analysts rate the stock “buy” or higher, while five have a “hold” rating and one rates it “strong sell”

** The median price target is $209; prior to Q1 earnings PT on stock was $250.

** Boeing closed down 1% at $156.64 on Monday.