Boeing's Lowered Guidance No Cause for Concern: Strategist
Robert Toomey, chief equity strategist at E.K. Riley Advisors, told CNBC’s “Squawk Box” that he’s not concerned about Boeing’s low profit guidance.
The aircraft builder issued profit guidance for 2007 and 2008 that’s below analysts’ consensus estimate after reporting first quarter profit and revenue gains that beat market expectations.
“I think Boeing is being conservative,” Toomey said Wednesday. “I think they’re keeping their powder dry. I think (Boeing has) a number of hurdles this year, the rollout of the 787 being a big hurdle. I don’t read that much into it.”
Toomey has a $109 price target on Boeing’s stock , which is a Dow component.
“I don’t think I’d be buying (the stock at the current level) but I’d be holding it,” Toomey said.
He said the risk in the stock is delay in rolling out the 787 Dreamliner.
“It’s a huge program,” Toomey said. “It’s a new technology and new composite material so I think it’s something that investors should be watching. But I don’t see it as an inordinate risk. I’m confident that they have the technical aspects of the program worked out. I’m not concerned that it’s going to have a major delay. But any delay in the program would cause some investors to be disappointed.”
In the first quarter of 2007, Boeing reported earnings of $877 million, or $1.12 a share, up from $692 million, or 88 cents a share in the same period a year ago. The company reported strong orders and cut costs.
Boeing said it expects to post revenue of $64.5 to $65 billion in 2007 and earn $4.45 to $4.75 a share. The consensus Wall Street estimate is $4.82 a share on revenue of $65.2 billion. Next year, Boeing said it expects to earn $5.55 to $5.75 a share on revenue of $71 billion to $72 billion.
The London Times reports that US Airways plans to announce an order for 20 to 30 Boeing 787s this week, ditching the Airbus A350. Virgin Atlantic ordered 15 787s valued at $2.8 billion on Tuesday.