Is Boeing Stock is Ready for Lift-Off ?

Aerospace giant Boeing NYSE: BA stock has rallied strong off its post-pandemic lows at $113.02 to cut its losses on the year to (-24%). While the pandemic crushed Boeing, it is reaping the benefits of rebound in the epicenter travel industry. The Company saw demand spike for commercial aircrafts as commercial traffic accelerates to the highest levels since pre-COVID 2019 in both North America and Europe as China lags. Major carrier customers include the like of Southwest Airlines NYSE: LUV, Delta Air Lines NYSE: DAL, and United Airlines NYSE: UAL. Boeing also recorded positive cash flow of $100 million which is a vast improvement from a year ago. The Company expects positive cash flow for the rest of 2022. The Company is waiting on the Federal Aviation Administration (FAA) clearance to start deliveries on the 787. The Company has a backlog of $372 billion which includes over 4,200 commercial airplanes. There is heavy speculation for Boeing to return to profitability in fiscal Q3 2022 as it emerges from the 737 MAX disaster. The Company is ready to turn the corner and emerge stronger. There are still headwinds including supply chain constraints, logistics, raw materials costs, inflationary pressures and high fuel costs. However, Boeing is very bullish on the recovery in air traffic which is bolstering the demand for its planes as airlines return to ramping up their fleets. Prudent investors looking for exposure in the recovery of air travel can look for opportunistic pullbacks in Boeing.

Q2 Fiscal 2022 Earnings Release

On Jan. 19, 2022, Boeing released its fiscal second-quarter 2022 results for the quarter ending June 2022. The Company reported an earnings-per-share (EPS) loss of (-$0.37) excluding non-recurring items versus consensus analyst estimates for a loss of (-$0.10), a (-$0.27) miss. Revenues fell (-1.9 %) year-over-year (YoY) to $16.68 billion missing analyst estimates for $17.53 billion. The Company reached positive operating cash flow of $100 million. Total backlog including over 4,200 commercial airplane orders rose to $372 billion. The Company increased production of 737s to 31 per month and waiting on FDA clearance for 787 deliveries. Boeing CEO Dave Calhoun commented, "We made important progress across key programs in the second quarter and are building momentum in our turnaround. As we begin to hit key milestones, we were able to generate positive operating cash flow this quarter and remain on track to achieve positive free cash flow for 2022. While we are making meaningful progress, we have more work ahead. We will stay focused on safety, quality and transparency, as we drive stability, improve performance, and continue to invest in our future."

Conference Call Takeaways

CEO Calhoun started off with a recap of the Farnborough Air Show witnessing the 777X in flight and its investment in the eVTOL market through Wisk. They met with suppliers, customers, and partners and collected over 200 orders and commitments that week for its full line of planes from the 737MAX to the 777X. It underscored the anticipation of flight renewals projects. They customers are busy and beefing up their fleets in the face of supply chain constraints. He noted many positives in the quarter including incredible performance of the 737 MAX and being on the verge of delivering the 787 upon clearance from the FAA. They are prioritizing the predictability of the delivery chain focusing mainly on the engine supply lines and the constraints engine suppliers are facing. The commercial service business was up 30% with strong margins to boot. Operating cash flow has turned positive ahead of plan and expected to remain cash flow positive through calendar year 2022. Supply constraints are not deterring the increasable demand from customers as their rebuild their airplane fleets for the future to meet significant demand from passengers. COVID is slowing down China but it along with geopolitical overhang should not impact the cash flow positive posture its taken on the year. Global services is on its way back in a “big way”.

BA Opportunistic Pullback Levels

Using the rifle charts on the weekly and daily time frames provides a precision view of the playing field for BA stock. The weekly rifle chart uptrend put in a double top near the $163.35 Fibonacci (fib) level. The weekly rifle chart breakout has a 5-period moving average (MA) support rising at $148 followed by the 15-period MA support at $142.62. The weekly 50-period MA sits at $186.81. The weekly stochastic formed a mini pup rising through the 40-band. The weekly market structure low (MSL) buy triggered on the breakout above $140.70. The daily uptrend is stalled into a make or break as the 5-period MA starts to slope down at $156.40 with rising 15-period MA at $151.18. The daily stochastic has fallen through the 80-band. The daily 200-period MA sits at $181.78. The daily upper Bollinger Bands (BBs) sit at $170.06. The daily 50-period MA support sits at $138.37. The lower BBs sit 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. The upside trajectories range from the $174.07 fib up towards the $202.93 fib level.