The Boeing Company (BA) received an order from Republic of Kazakhstan’s flag carrier Air Astana for four 767-300ERs (Extended Range) and three 787-8s. The order is valued at $1.3 billion at current list prices, making this the largest single order for commercial airplanes in Kazakhstan’s history.
The Boeing 767 family of airplanes is fuel-efficient and provides maximum market versatility in the 200- to 300-seat market. Boeing has delivered more than 1,000 767s that are flown by over 120 operators around the world. Similarly, Boeing’s 787 airlines use 20% less fuel than similarly sized airplanes.
The Boeing Company is among the best-positioned in its sector due to its balanced exposure to commercial aircraft and defense equipment. We expect the growth momentum to be maintained by planned production rate increases and a globally diversified customer base.
In the recently reported fourth quarter of 2011, Boeing soaring on higher deliveries of commercial airplanes posted strong numbers.
Looking forward, Boeing expects its fiscal 2012 GAAP earnings to be in the range of $4.05-$4.25 per share, and adjusted earnings in the band of $5.06-5.26 per share. Revenue for 2012 is expected to be between $78 billion and $80 billion. Commercial Airplanes’ 2012 deliveries are expected to be between 585 and 600 airplanes and are already sold out. This includes an expected 70 to 85 787 and 747-8 deliveries. Commercial Airplanes’ 2012 revenue is expected to be between $47.5 billion and $49.5 billion with operating margins between 8.5% and 9%. In the defense space, the company expects defense revenue for 2012 to be between $30.0 billion and $30.5 billion with operating margin greater than 9%.
However, in the near term, headwinds over the global airline industry along with expected cutbacks in the U.S. defense budget loom large over the current valuation of the company.
Headquartered in Chicago, Boeing Company is a premier jet aircraft manufacturer and one of the largest defense contractors in the U.S. The company’s customers include domestic and foreign airlines, the U.S. Department of Defense (DoD), the Department of Homeland Security, the National Aeronautics and Space Administration (NASA), other aerospace prime contractors, and certain U.S. government and commercial communications customers.
Considering the fundamentals, we are maintaining our Neutral recommendation on the stock. Boeing currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. This is in sync with other aerospace and defense behemoths like General Dynamics Corporation (GD) and Lockheed Martin Corporation (LMT).
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