There is still no clear trend for Boeing shares as the business of the company remains under the pressure

By: Stanko Iliev
Stanko Iliev
Stanko dedicates himself to providing investors with relevant information they can use to make investment decisions. He loves the… read more.
on Dec 19, 2020
  • Boeing reported a 29.4% Y/Y decrease in revenues in Q3
  • The commercial airplanes segment has weakened more than -55%
  • The next year will be competitive for Boeing, and it is not the right moment for buying this stock

Boeing (NYSE: BA) shares have weakened from $349 below $100 since February 2020, and the current price stands around $219. Boeing’s business will be affected by the COVID-19 pandemic for a while, and the company announced that it would cut 11,000 jobs.

Fundamental analysis: The business of the company remains under the pressure

The Boeing Company is an American multinational corporation that manufactures and sells airplanes, rockets, satellites, telecommunications equipment, and missiles worldwide. Boeing reported a 29.4% Y/Y decrease in revenues in Q3, and Q3 GAAP EPS came in at -$0.79.

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Revenues have decreased mainly due to the Covid-19 pandemic, there has been some positive data regarding a COVID-19 vaccine, but no one still doesn’t know what will happen with the virus. The commercial airplanes segment has weakened more than -55%, and the company announced that it would cut 11,000 jobs that will take its overall headcount to under 130,000 by the end of 2021.

Boeing’s business will be affected by the COVID-19 pandemic certainly the next two or three years, and analysts predict that passenger traffic will return to 2019 levels in ~3 years. “The global pandemic continued to add pressure to our business this quarter, and we’re aligning to this new reality by closely managing our liquidity and transforming our enterprise to be sharper, more resilient and more sustainable for the long term,” said CEO Dave Calhoun.

According to the latest news, Boeing has secured a $400M contract for B-1 and B-52 engineering services for the U.S. Air Force. The company also won a $9.8B IDIQ contract for modernization and sustainment of the F-15 Saudi Arabia fleet.

There are some apparent risks when it comes to investing in Boeing shares, and maybe it is not the right moment for buying this stock. This stock is still risky, in my opinion, and the company’s business remains under pressure.

Technical analysis: There is still no clear trend for Boeing shares

The stock price has weakened more than 35% since February as the company continues to have a fall in revenues. The next year will be competitive for Boeing, but the aviation segment is expected to benefit once the economy reopens.

Data source: tradingview.com

The critical support levels are $200 and $150; $250 and $300 represent the resistance levels. If the price jumps above $250, it would be a signal to buy Boeing shares, and the next target could be around $270.

On the other side, if the price falls below the $150 support level, it would be a firm “sell” signal.

Summary

Boeing had a 29.4% Y/Y decrease in revenues in Q3, and the business of the company is still under pressure. Revenues from the commercial airplanes segment have decreased more than 55%, mainly due to the Covid-19 pandemic, and the company announced that it would cut 11,000 jobs. There are some apparent risks when it comes to investing in Boeing shares, and maybe it is not the right moment for buying this stock.

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