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Economic Moat




Boeing Raises and Conserves Cash in Second Quarter as It Awaits MAX Re-Entry and Better Environment

Burkett Huey, CFA Equity Analyst

Analyst Note

| Burkett Huey, CFA |

Wide-moat-rated Boeing reported a pivotal quarter as the company adjusts its longer-term commercial production targets to better serve the smaller aviation market. We’re reducing our fair value estimate to $264 per share from $281 to reflect lower midcycle 737 MAX  and 787 production and consequently a lower midcycle operating margin due to less learning curve improvements. We remain bullish on the stock, and our critical assumption is that Boeing will return to 2018 narrow-body production levels by 2024, which is predicated on the assumed wide distribution of a COVID-19 vaccine by mid-2021.

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Company Profile

Business Description

Boeing is the world’s largest aerospace and defense firm. With headquarters in Chicago, the firm operates in four segments, commercial airplanes, defense, space & security, global services, and Boeing capital. Boeing’s commercial airplanes segment produces about 60% of sales and two-thirds of operating profit, and it competes with Airbus in the production of aircraft ranging from 130 seats upwards. Boeing’s defense, space & security segment competes with Lockheed, Northrop, and several other firms to create military aircraft and weaponry. The defense segment produces about 25% of sales and 13% of operating profit, respectively. Boeing’s global services segment provides aftermarket servicing to commercial and military aircraft and produces about 15% of sales and 21% of operating profit.

100 North Riverside Plaza
Chicago, IL, 60606-1596
T +1 312 544-2000
Sector Industrials
Industry Aerospace & Defense
Most Recent Earnings Jun 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 161,100