Opinions
David Burrows
Boeing
BA-N
DON'T BUY
Oct 02, 2024
Stock price when the opinion was issued
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The CFO recently made comments: the troubled 737 is closer to resuming production, as the 787 could increase production later this year. Really, the 737 is more important. Also, their ailing defence business is starting to stabilize and recover, though their commercial business could improve. Maybe cash flow will improve; there are signs it is already. They won't be hit by tariffs, because 80-90% of their supply chain is in the US. They have a half-trillion-dollar backlog Last Friday, the US Air Force awarded Boeing the contract for fighter jets. He'd like to see a few good quarters of stronger results, and it's early in this turnaround though it's getting its act together. Also, Boeing enjoys little competition and airplane demand is strong.
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He hopes their troubles are behind them but as an equity investor is not sure if he sees the light at the end of the tunnel yet. There are only three companies in the world that make planes and global travel is growing. It has some logistics issues and has received some significant slaps on the wrist by the transportation board. There is a lot of debt but the order book is pretty filled up. He thinks there has been some change in management.
Prefers not to step in front; like picking up dimes in front of a bulldozer. You could buy it and be a hero, but he'd prefer to buy at 20% off the lows with a better technical setup. Too many unhappy shareholders just waiting for it to move higher so they can get their money back. You want happy shareholders around you.
He owns GE (it's now purely jet engines after the spinoff). Also owns ERJ, which has an opportunity to win significant market share.